Carlos Osorio/AP Photo Michigan Governor Gretchen Whitmer speaks to business leaders, Monday, Dec. 20, 2021, in Detroit. Governor Gretchen Whitmer will ask lawmakers to triple Michigan’s tax credit for low- and middle-income workers, putting an average of $350 more a year in their pockets. The proposal, to be unveiled in his annual state of the state address, would restore the state earned income tax credit to 20% of the federal credit. It was cut to 6% a decade ago under a Republican-drafted law that cut taxes on businesses.

LANSING, Mich. — Governor Gretchen Whitmer will ask lawmakers to triple Michigan’s tax credit for low- and middle-income workers, putting an average of $350 more a year in their pockets.

The proposal, to be unveiled in his annual state of the state address, would restore the state earned income tax credit to 20% of the federal credit. It was cut to 6% a decade ago under a Republican-drafted law that cut taxes on businesses.

The refundable credit helps more than 730,000 families per year. In the 2019 tax year, they received an average credit of $150. It would be around $500 under Whitmer’s plan, which was reviewed by The Associated Press ahead of his Wednesday speech.

“Michigans who work hard every day to support their families deserve a break and a bigger tax refund,” says a summary document prepared by the Democratic governor’s office.

Whitmer, who is running for re-election, also plans to seek a phased end to the so-called state superannuation tax – which was another facet of the tax overhaul passed by the government at the time. Rick Snyder and the GOP-controlled legislature in 2011. The details were first reported by the Detroit Free Press on Sunday.

Whitmer’s tax changes, if passed, would come as Michigan’s two top revenue funds are set to receive $5.8 billion more than expected over three fiscal years.

This is not the first time the governor has given tax breaks to retirees and low-wage workers.

When she took office in 2019, she proposed doubling the earned income tax credit to offset the impact on low-income workers of a fuel tax increase of 45 cents a day. gallon. She tried to restore the tax exemption for retirement income – a campaign pledge – to raise taxes on some businesses.

None of the tax proposals put forward.

Now, however, there could be momentum for tax relief in some form. House Republicans said last week they plan to make it a priority in their budget plan, citing the effect of inflation on family budgets. Last month, Senate Republicans introduced a bill that would cut personal and corporate income tax rates to 3.9%, from 4.25% and 6%, and create a tax credit. tax of $500 per child.

Proponents of the state-earned income tax credit, mostly Democrats and groups advocating for the poor, said it helps low-income people pay bills and buy groceries and other necessities. At a legislative hearing in December, small business and restaurant associations also backed a credit boost, saying it would encourage people to return to work during the pandemic.

“The Michigan EITC is a win-win investment that resonates in every county and political district, benefits rural and urban residents, and supports families while being spent in our small businesses and local communities,” said Monique Stanton, president and CEO of the Michigan League for Public Policy.

To claim and qualify for federal and state credits, a single childless filer can earn up to $21,430. The threshold for married joint filers with three or more children is $57,414.

If the credit exceeds the taxes owed, recipients get a tax refund.

Proponents of taxing retirement income have argued that retirees should pay their share rather than placing the burden on younger residents. At age 67, they get an exemption of $20,000 for a single filer and $40,000 for joint filers, whether the money comes from retirement income or employment.

Senator Tom Barrett, a Republican from Charlotte who is sponsoring legislation to repeal the “pension tax”, welcomed the governor’s proposal, saying it could make a “huge difference” for seniors.

“It is unfair for those on fixed incomes to bear this additional tax burden on previously earned benefits,” he said.