Increase to 30% supports working families, small businesses and economy, has bipartisan, cross-sector support
Lansing, Mich. (Jan. 24, 2023) – Today, the Michigan Senate Housing and Human Services Committee passed Senate Bill 3, landmark legislation introduced by State Sen. Kristen McDonald Rivet (D-Bay City) that will expand the Working Families Tax Credit to put more money back in the pockets of around 750,000 Michigan workers. This bill will help workers pay for daily essentials like housing, car repairs, food and childcare while simultaneously pumping half a billion dollars back into small businesses and local economies.
SB 3 would increase the state’s match of the federal Earned Income Tax Credit (EITC) from 6 percent to 30 percent. Of states with their own EITC, Michigan currently has one of the lowest percentages in the country. The passage of McDonald Rivet’s 30 percent Working Families Tax Credit will make Michigan a national leader in better supporting workers, delivering approximately $600 more annually to struggling working families.
“This is about adding needed money to workers’ pockets now without adding government bureaucracy,” said Sen. McDonald Rivet. “If we go big enough, we can improve stability and opportunities for one million children—that’s half of our state’s kids. We can do right by our working families who helped get us through the pandemic, and incentivize work to address the labor shortage strangling our recovery since then.”
At today’s committee hearing, legislators heard directly from impacted workers, service providers and business groups on the benefits of SB 3. Supportive testimony on the bill was shared from the Michigan League for Public Policy, the Michigan Restaurant and Lodging Association, the Small Business Association of Michigan, the Michigan Catholic Conference, United Way for Southeastern Michigan, the Detroit Regional Chamber of Commerce, and the Michigan Chamber of Commerce.
“On behalf of our 5,000 member businesses of every size and industry in all 83 counties across the state, the Michigan Chamber of Commerce urges Senate Housing and Human Services Committee members to act swiftly in increasing the state’s Earned Income Tax Credit from the current 6 percent to a percentage that provides a direct, meaningful benefit for hardworking Michiganders while simultaneously being fiscally responsible to ensure sustained relief for years to come,” Jim Holcomb, President & CEO of the Michigan Chamber of Commerce, wrote in testimony submitted in committee today. “An increase in the state’s EITC provides legislators from both sides of the aisle the opportunity to kick-off the 2023-2024 legislative session on common ground by passing financial relief to struggling families that can make a real difference while also building our workforce and boosting our local economies and communities.”
It is estimated that a 30 percent match would return around $553 million to local economies and small businesses. Nearly 230 organizations have signed a letter urging Michigan’s legislative and executive branches to adopt a 30 percent match of the federal EITC, citing it as a “pro-work” policy with immediate impact to boost local purchasing power.
The federal EITC was created by Republican former President Gerald R. Ford and a Democratic Congress. The Michigan EITC was established by a Republican-led Legislature in 2006 and signed into law by then-Gov. Jennifer Granholm, a Democrat. Over the years, the EITC has been touted by Republicans and Democrats alike, including former President Ronald Reagan, Republican former U.S. House Speaker Paul Ryan, and Democratic former presidents Jimmy Carter and Barack Obama.
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Selected to serve as one of the Michigan Senate’s two Assistant Majority Floor Leaders, Sen. McDonald Rivet has 30 years of experience in educational and economic policy and strategic leadership. She represents the 35th Senate District.