The Michigan Legislature is proposing more than $2.5 billion in tax cuts.
The plan would lower income taxes from 4.25% to 4%, provide a $500 child tax credit, and raise the earned income tax credit from 6% to 20% of the federal credit.
Representative Matt Hall (R-Comstock Twp.) sponsored HB 4568, which provides the bulk of the cuts. He said it’s a continuation of previous tax cut plans that Governor Gretchen Whitmer vetoed.
“I think we’ve demonstrated through this plan that we’re willing to lower the income tax, we’ve demonstrated plans in the past that show we’re willing to do things with the gas tax, to suspend the gas tax temporarily to help give people relief,” Hall said. “We’ve shown we’re willing to work on the earned income tax credit here and that’s why we’ve put a great plan on the table that delivers that relief.”
Supporters pointed to strong revenue estimates and combined with rising inflation showing the need for relief.
Both chambers of the Legislature passed HB 4568, while rules meant the House had to wait to take up its partner bill, SB 784.
The legislation does not include the separate $500 tax rebate that Governor Gretchen Whitmer proposed for "working families." The governor did not offer details on who would qualify.
“We’ve got historic resources to work with but they’re one-time in nature and that’s why as families are hurting, we want to give them relief right now and the best, quickest way to do that is through a tax rebate,” Whitmer said Thursday morning.
The Senate voted down an effort from Sen. Curtis Hertel (D-East Lansing) to amend the legislation to include that rebate. He lamented that Democrats weren’t more involved in the process of bringing it to the floor.
Specific language of the proposal wasn’t available until Thursday afternoon. Hertel and others said Democrats had little notice it was coming.
“You know, when I want to negotiate with somebody, what I do is I sit across the table from them and I listen to them and I see what they actually want, and then I tell them what [I] want and we have a conversation,” Hertel said.
But Senate Majority Leader Mike Shirkey (R-Clarklake) rejected claims that the legislation wasn’t negotiated with the governor and Democratic lawmakers.
“Just about everything in this bill at one time or another with the exception of maybe the reduction in income tax has been called for by this governor. And so, she can find her fingerprint in virtually 80 percent of what this bill includes,” Shirkey told reporters after the legislation had passed his chamber.
Another concern of Democrats was the amount of time before Michigan residents would start seeing the results of the proposed changes. Many of the items in the package wouldn’t take effect until the 2023 tax year.
When asked Thursday afternoon if Whitmer would consider signing the legislation when it reaches her desk, a spokesperson returned the focus to the need for a quick effect.
“It should deliver immediate relief to families who have worked their tail off, paid their dues, and could use a little extra help right now – not a year from now,” Bobby Leddy said in a written statement.
The legislation passed Thursday includes long-term changes like upping the standard deduction for taxpayers aged 67 and older, increasing the personal exemption, and providing breaks for certain disabled veterans.
“I know it’s not instantaneously, but the bigger picture is if we keep doing quick fixes instead of long fixes, we get ourselves farther in the hole,” Rep. Timothy Beson (R-Bay City) said.
Beson added he also sees the tax cuts as a way of slowing population loss, addressing some long-term revenue concerns.
Representatives from both the House and Senate Fiscal Agencies and either the state treasurer or state budget director are set to meet Friday at 9 a.m. to come to a consensus on Michigan’s estimated revenue for the upcoming fiscal years.
