Lansing Republicans have proposed another election-year tax cut plan that would cut personal income taxes, increase the Michigan income tax credit and create a $500 tax credit. $ per child.
Lawmakers of the $2.5 billion plan from the GOP-controlled State House and Senate rolled out Thursday follow Governor Gretchen Whitmer’s proposal earlier in the day for an immediate $500 tax refund. $ to working residents.
The proposal passed the state Senate this afternoon in a 22-14 vote and has been sent to the state House for consideration.
Whitmer, who in March vetoed an earlier tax cut plan passed by Republican lawmakers, has also pushed for lower taxes on retirement income and an increased earned income tax credit. for low-income workers. The GOP plan presented this week includes versions of both.
The latest competing proposals come as the House Tax Agency and the Senate Tax Agency released new forecasts this week showing that state revenue is trending higher for the current fiscal year and year. next year compared to the previous January forecast.
“The state government is flooded with money” Michigan Small Business Association CEO Brian Calley said during a Thursday afternoon briefing for members.
The GOP’s tax cut plan would cut the state’s personal income tax rate from 4.25% to 4%. The proposal would reduce state revenue by $581.3 million in the current fiscal year and $2.6 billion in the 2022-23 fiscal year, according to an analysis by the House Fiscal Agency. of House Bill 4568which was under consideration today in the Legislative Assembly.
The Small Business Association of Michigan was quick to back the GOP proposal that would reduce the tax burden on small business owners, most of whom pay personal income tax on the income they receive from the business rather than the state corporate income tax, Calley said.
Calley called the tax cut plan “quite reasonable” and said he hoped “the governor will support the idea of taking some of this windfall that the state government has received and give it back to the hard-working citizens of Michigan, including, in our view, the entrepreneurs who create so much opportunity in every community in our state.
Whitmer said earlier today that she would not support the Republican plan, which she said was “not a real plan,” according to a report by gongwer news service.
“It’s a massive decision they’re making, using one-time funds with little regard for what it will mean for our ability to invest in skills, to attract investment to Michigan, to invest in education.” , Whitmer told Gongwer. .
Passage is still expected today of HB 4568, which Whitmer is expected to veto, setting up negotiations with GOP lawmakers as the administration and legislature face a June 30 deadline to pass a budget for the 2023 financial year which begins on October 1.
The GOP plan would also increase the state earned income tax credit from 6% of the federal credit to 20%. Whitmer proposed the same increase in the earned income tax credit.
Individual tax exemptions, now at $4,900, would increase by $1,800, and retirement income exemptions would increase by $1,800 per person from the current $20,000, or $40,000 for a couple, in the under the GOP regime.
In a letter to legislative leaders, Whitmer said a revenue conference on Friday is expected to indicate the state “should have additional revenue as we approach fiscal year 2023” which begins Oct. 1. provide immediate relief from high inflation.
“Let’s use our extra revenue to put money in people’s pockets and bring real relief to taxpayers now,” Whitmer wrote. “Michigans need real relief right now. Let’s work together to put money in people’s pockets and reduce costs.
A coalition of community organizations and trade unions known as the MI Future Fund today urged lawmakers to use one-time investments in roads and schools, rather than tax cuts.
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