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Snyder Agrees To Keep Partial Tax Credit For Working Poor


By Rick Pluta

The Snyder administration changed its position on tax breaks and working poor families. The administration did an about-face on eliminating the earned income credit, and now says families should still be able to claim it, but at a reduced rate.

A state Senate committee began hearings today on Governor Rick Snyder's tax reform proposal, with no guarantee the governor has the votes to get his plan approved. But the Snyder administration continues to negotiate with lawmakers, and the new development shows tax reform remains a work in progress in Lansing.

Low-Income Credit
Families eligible for the state earned income credit in 2009 claimed an average of $432 dollars per household. The Michigan League for Human Services says the reduced credit will still allow eligible families to take $140 dollars off their 2011 tax bill, or add part of it to their return. League President Gilda Jacobs says this is an improvement over the administration's original plan to scrap the credit altogether or allow a small credit only for working poor families with children.

"It does preserve a good chunk of the earned income tax credit, it's for all filers, so it really will be spread out over 700,000 people in the state who really need it," she says.

Jacobs says the money may not seem like much, but it could help with school clothes or a car repair that allows a working adult to get to a job.

Snyder administration officials say their plan can absorb the change without affecting the business tax rollback that remains a key element of the strategy to accelerate new jobs created mostly by small- and medium-sized businesses. Lieutenant Governor Brian Calley says that will mean more to working poor families than a tax break.

"Our goal is to make sure that they have jobs so that they don't qualify for the earned income tax credit at all anymore," he says.

Shaky Support For Tax Reform
Democrats argue that tax breaks for businesses won't create many jobs, while budget cuts to schools, universities and local governments will make the state less competitive in attracting or keeping families. Republican leaders are counting on few, if any, Democratic votes to win Senate approval of the governor's tax plan.

But the Republican governor also faces a challenge on the G.O.P. side of the aisle. Many Republicans are loathe to support the package because it would extend the state income tax to pensions of people born after 1946. In fact, the bill bypassed the state Senate Finance Committee, the usual venue for tax legislation. Support on that committee is so weak that even the chair opposes the tax plan.

The tax reform legislation was assigned instead to the Senate Reforms, Restructuring and Reinventing Committee. Committee chair Mark Jansen says he's ready to vote for the package, but a lot of his G.O.P. colleagues remain unconvinced.

"So now we're working through what are their questions and what other issues bubble up for them and we have to go through that process as senators," he says.

Jansen says he expects the measure will need to be "tweaked" some more before it comes up for a Senate vote, maybe later this week.

Governor Snyder, for his part, says he thinks the negotiations are promising and his tax plan remains on track.

"I think we're in reasonably good shape and you don't take it for granted until the vote comes," he says.

The governor says there is still no reason why tax reforms and the new state budget cannot be wrapped up by his deadline of May 31st.