LANSING, Mich. (WOOD) — Michigan Republican legislators are celebrating a new plan to cut income taxes and give other tax relief — but don’t expect to see that bill signed in to law anytime soon.
The House and Senate’s plans would reduce the state’s income tax from 4.25% to 3.9%, create a $500 tax credit for each child in a household and increase the deduction for seniors starting at the age of 62. It’s part of the broader discussion about how to spend surplus state funds.
But since the plan was not negotiated with Gov. Gretchen Whitmer, a Democrat, it does not seem likely that she will sign off on what would amount to a $4.5 billion expenditure.
Given that the tax rollback would remain in place despite future revenues, Senate Minority Leader Jim Ananich, D-Flint, says he would prefer a one-time payment to help taxpayers now.
“We know that people are struggling now,” he said. “I would prefer, since we have so much excess revenue, we have such a surplus … if we’re going to do something on the tax code that we do something right now, do something meaningful to families right now to help deal with this inflation. Almost like an inflation adjuster. Basically put money, a check, in somebody’s pocket right now. We can afford it. We don’t have to worry about the long-term consequences.”
Those long-term consequences could be lower overall revenues and taxation at a lower rate that could force spending cuts, always a struggle in Lansing.
In 2007, the income tax was raised at the behest of then-Gov. Jennifer Granholm. It was sold as a temporary fix to the state’s sagging economic condition during the recession.
On Thursday, Whitmer said in a release she will not support the Republican plan to roll back taxes but is calling leadership from the House and Senate to formal meetings to try to find a compromise on returning some surplus state funds to taxpayers.