The Michigan State Legislature advanced a tax relief proposal to Gov. Gretchen Whitmer’s desk late Tuesday that will provide tax cuts for the state’s retirees and low-wage workers or the HB 4001.
A comprehensive tax agreement that would slash taxes for pensioners and low-income employees and increase funding for business incentives is on its way to the governor’s desk, but it would not include one-time $180 rebate checks for all Michigan taxpayers.
Michigan Gov. Gretchen Whitmer delivers her State of the State address to a joint session of the House and Senate, Jan. 25, 2023, at the state Capitol in Lansing, Mich. The Michigan Senate advanced a tax relief proposal to Gov. Whitmer’s desk late Tuesday, Feb. 28, 2023 that will provide tax cuts for the state’s retirees and low-wage workers. Democrats were unable to garner Republican support to approve $180 “inflation relief checks” that Whitmer had unveiled as part of her plan. Without the $180 checks, an income tax rate reduction is likely. (Photo via AP)
House Bill 4001 was stuck at the time because it did not receive the super majority necessary to have immediate effect, a procedural vote that allows legislation to become law immediately after it is signed. The bill passed the Senate on February 16 by a vote of 20-17.
The $180 checks would only be issued to state filers as worded if the legislation became effective in the middle of April. It won’t go into action right away, but in 2024 it will.
After a second immediate effect vote failed to secure the required Republican votes on Tuesday, Senate Democrats delivered the bill to Governor Gretchen Whitmer without any relief checks.
Read More: $180 Inflation Relief Checks In Michigan: Will Whitmer Give Stimulus Payments?
Michigan Gov. Gretchen Whitmer Plans To Slash Taxes, Increasing Mental Health Workers
$850 Relief Checks In Maine: IRS Won’t Tax 858,000 Maine People For Receiving Such Money
“It’s terrible they won’t be getting out,” Senate Majority Leader Winnie Brinks, D-Grand Rapids, told reporters on the floor. Unfortunately, the Republicans were not willing to support us in getting that support, despite our hopes.
With House Bill 4001, taxes on public and private pensions would gradually be eliminated, and the state’s earned income tax credit would increase from 6% to 30% of the federal rate.
Senate sends tax deal to Whitmer without enough support for $180 onetime checks to all Michigan tax filers to take effect (Photo via https://www.bridgemi.com/)
While 500,000 seniors would save an average of $1,000 from the pension tax, the tax expansion would save approximately 700,000 families roughly $600 annually.
According to the proposal, the state would divert up to $600 million into economic development initiatives if corporate income tax receipts in any given year exceeded $1.2 billion, including $500 million for a business incentive program known as the Strategic Outreach and Attraction Reserve Fund.
Republicans opposed the one-time checks because they would have prevented the state’s income tax rate from possibly falling as a result of a 2015 law that tied the income tax to growth in state general fund revenues. But, the tax cuts enjoyed bipartisan support.
Read More: House OKs EITC, Pension Tax Bill; What’s Next?
Universal Basic Income In Michigan: Will It Fix An American’s Poverty Issue?
Recent estimates from nonpartisan House and Senate fiscal agencies suggest that the trigger law could lower the state’s income tax rate from 4.25 percent to as low as 4.05 percent, despite the fact that the state government is sitting on a roughly $9 billion surplus and inflation is pinching people’s wallets.
Once the final revenue projections for 2022 are known, probably in March, any cuts would be made official.
The Michigan Senate approved a tax bill to boost the earned income tax credit and reduce retirement taxes, but doesn’t include the $180 inflation relief checks touted by Gov. Gretchen Whitmer. (Photo via https://tennesseestar.com/)
The bill’s unanimous defeat by Senate Republicans, according to Sen. Aric Nesbitt, R-Porter Township, “protected the automatic income tax rollback that is due to millions of Michigan residents who need permanently lowered taxes, not a one-time gimmick that disappears in one trip to the grocery store,” he said.
