Tax break for working poor

Peter Ruark

In a Factually Speaking post on Feb. 22, I wrote about the federal Child Tax Credit and how the American Recovery and Reinvestment Act lowered the minimum household income level from $10,000 to $3,000.

This change has helped many very poor families in Michigan qualify for the credit, and Congress must make the change permanent. Without such legislation, the minimum eligibility level for the Child Tax Credit will jump to $12,850 next year. 

The Center on Budget and Policy Priorities has just released a paper showing that failure to make the change permanent will result in a loss or reduction of the credit for the families of 477,000 urban and suburban children in Michigan and 106,000 rural children.

The reduction for some families comes about because the tax credit is phased in at the low end of the income eligibility scale. Currently, families with two children with household earnings between $3,000 and $16,333 receive a partial credit based on their income. Families who earn more than $16,333 (but less than $70,000 if they are one-parent families and $140,000 if they are two-parent) receive the maximum credit of $1,000 per child. 

If Congress does not make the $3,000 threshold permanent, families earning less than $12,850 won’t receive a Child Tax Credit at all, and families earning less than $26,183 won’t receive the full $1,000 amount.

As with the federal Earned Income Tax Credit, much of the money families get back for the federal Child Tax Credit gets spent in their own communities, helping local businesses and stimulating the economy. That is why this tax credit expansion was passed as part of the Recovery Act.

If you feel comfortable calling your representatives in Congress, you might want to pick up the phone and ask them to stand up for low-income working families in our state. You can find your representative’s office phone number here.

— Peter Ruark

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3 Responses to Tax break for working poor

  1. […] Michigan needed the Recovery Act in 2009. It needs it now – it’s important that Congress votes to extend the enhanced Medicaid match, EITC expansions, unemployment benefits and the Child Tax credit. […]

  2. […] Michigan needed the Recovery Act in 2009. It needs it now – it’s important that Congress votes to extend the enhanced Medicaid match, EITC expansions, unemployment benefits and the Child Tax credit. […]

  3. […] Michigan needed the Recovery Act in 2009. It needs it now – it’s important that Congress votes to extend the enhanced Medicaid match, EITC expansions, unemployment benefits and the Child Tax credit. […]

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