Earlier today, Governor Granholm signed legislation that will increase Michigan’s minimum wage to $6.95 in October – and to $7.40 on July 1, 2008. This marks the first time in seven years that Michigan’s minimum wage workers will see an increase, and will result in an increase of $72/ week, or $3,744 over the course of a year for a full-time worker making the new minimum.
While this is good news, a recent report from the Center on Budget and Policy Priorities shows we could – and should – do much more to secure economic security for the working poor in Michigan. Michigan is one of only five states in the country where a family of four making $14,000 per year – or about the equivalent of the new minimum – still has to pay state income tax. For a family of three, the income tax threshold is $10,712. This means that a working family whose income is nearly $6,000 short of the federal poverty line still has to pay taxes to the state, making it even harder for the working poor to ever reach middle-class status.
Perhaps most galling in all of this is that while the Michigan GOP has been eager to blow a $1.9 billion black hole in the budget by irresponsibly repealing the Single Business Tax with no plan to replace the revenue, and even gave away $250 million to the federal government in posturing on the estate tax , it has done precious little to improve the tax structure as it affects Michigan’s working poor. In simple terms, if you are want to pass along your multi-million dollar estate, you can do so tax-free. But if you’re working a full-time minimum wage job to make ends meet for your family, the state wants a cut.
We’re taught that we will be judged by how we treat the least among us. Today’s signing of the minimum wage is a great first step, but we need to do much more. For starters, we should eliminate state income taxes for all working families in Michigan making less than the federal poverty level. If according to federal government standards you’re considered poor, we as a state have no business taking any of that income. Second, we need to enact a state earned income tax credit, rewarding work and giving additional tax relief to working families as they make the transition from poverty to middle class. Such a bill is currently pending in the State Senate, but the GOP leadership has refused to even allow a hearing on the legislation.
Finally, we should always be explicit in explaining how we would pay for our ideas (something the GOP leadership in both houses of the legislature would do well to remember). Much of the cost of the EITC would be offset through increased revenue from the sales tax and the Single Business Tax (or whatever business tax system ends up replacing it) because low-income families tend to spend any additional money on the necessities of life, reinvesting the money back into our communities and creating new jobs. The rest of the revenue could be offset by repealing the GOP’s fool-hardy giveaway of estate tax dollars to the federal government, while creating an exception for family farmers.
Who we’re fighting for says a lot about our priorities, and the irresponsible actions on the Single Business Tax and Michigan’s estate tax by Republicans in the State House and State Senate stand in stark contrast to a positive agenda to reward work, provide opportunity and empowering Michigan’s working families the tools they need to achieve the American dream.
