The Michigan Association of United Ways and the Community Economic Development Association of Michigan commissioned Anderson Economic Group to analyze the economic benefits to local economies of the Earned Income Tax Credit (EITC) in Michigan. This report builds upon our two previous reports and uses new data to estimate the usage of the EITC among low-income households, and the net economic impact by county due to new spending from EITC refunds.
The Michigan Catholic Conference (MCC) commissioned Anderson Economic Group (AEG) to update our 2002 report A Hand Up for Michigan Workers: Creating a State Earned Income Tax Credit. The MCC commissioned the original report to provide policymakers with the necessary data and analysis to make a decision regarding the creation of a Michigan Earned Income Tax Credit (MEITC). The MCC supported the passage of a state EITC and has advocated for the refundable tax credit as a way to help families work their way out of poverty.
Since the release of the original report, the Michigan Legislature passed and Governor Jennifer Granholm signed into law the MEITC. The credit will go into effect beginning in tax year 2008. In this report we explain how the MEITC will work, the rationale for having a state EITC, and estimate the likely cost of the MEITC to the state using information not available in 2002.