Letter to the Editor
Small businesses will see economic boost from Working Families Tax Credit
Families across Michigan are struggling to cover basic needs because of record inflation. This has hampered their ability to support local small businesses, which in turn are facing inflationary and supply chain pressures of their own.
That’s why People First Economy is celebrating the passage of a broad tax relief package, which includes increasing the state’s Working Families Tax Credit. This tax package, called the "Lowering MI Costs" plan, will help low-income working families and stimulate spending at small businesses. Crafted by Gov. Gretchen Whitmer and Democrats in the Legislature, it is an economic stimulus that will help Michigan's economy from the ground up.
The Working Families Tax Credit is also known as the Earned Income Tax Credit and provides relief for low- to moderately low-income working families in the form of a credit on their tax returns. In 2006, Michigan lawmakers passed a law that provided 20% of the federal EITC on state income taxes for those that qualify. Under Republican Gov. Rick Snyder, that amount was reduced to 6% on state income taxes in 2010.
The legislation just passed quintuples the EITC to 30% for 700,000 households that qualify. It will benefit almost 1 million kids, including 45% of the kids in Michigan. The credit prioritizes people who need economic relief the most. This is good news for working families and small businesses, who will reap the benefits from this bottom-up economic stimulus.
Research repeatedly shows bottom-up stimulus measures like this have a direct impact on the local economies by pumping money into small businesses. Michiganders who receive the Working Families Tax Credit, including those who are part of the small-business workforce, are likely to spend that money on goods and services within their communities. Many will spend it at local grocery stores, child-care facilities, bakeries, mechanics, restaurants and other neighborhood businesses, stimulating the local economy.
This spending will create a ripple effect so small businesses can grow and local families will have better economic opportunities. More money in the local economy will bolster financial security and spur innovation.
This tax-relief measure is an important step in creating an economy that works for everyone, meets the basic needs of people across Michigan and builds local wealth. We at People First Economy applaud this forward-looking, progressive policy because it is good for small businesses, working families and it moves us toward a people-first economy.
Hanna Schulze
President, People First Economy.
This article originally appeared on The Holland Sentinel: Letter: Small businesses will see economic boost from tax credit
