The state of Michigan may have made so much money, that people are getting some back.
Last week, at the Consensus Revenue Estimating Conference the state projected a $9.2 billion budget surplus for 2023.
This is the third year of a major surplus and it’s so significant that an automatic tax break takes effect, if the projections bear out.
In 2015, the legislature, led by Republicans, put an automatic trigger into law that if the state government grew by a certain amount over the inflation rate, it would lower the state income tax automatically. That is looking like it’s about to happen and now Republicans want to make sure that it is kept intact.
“My hope is that there’s no funny business,” said Sen. Aric Nesbitt, the Senate Minority Leader. “We’re calling on them to not mess with the income tax cut.”
Michiganders are set to get a nice tax break later this year, as long as that eight year old law stays in place.
“If government spending grows by a significant number, the people of Michigan should get that money back and tax relief in an income tax cut,” said Rep. Matt Hall, the House Minority Leader.
That growth threshold was 42.5% higher than the rate of inflation. That is projected to hit this year. If and when it does, Michigan’s income tax rate will drop from 4.25% to 4.05%.
May sound like not much but it equates to about $500 million statewide.
“We need to protect it and Democrats shouldn’t touch it because that would be a tax increase,” said Rep. Hall. “The people of Michigan need that relief now.”
Nesbitt and Hall are pushing for democrats not to revoke the law and replace it with their own tax breaks, despite it not being clear those conversations are taking place. What is clear is current negotiations are underway over pension tax exemptions and earned income tax credits.
The GOP leadership wants to get as much tax relief as possible now, with such a large surplus at hand.
“Even if you wanted to do something immediately, I’m calling on the governor. Where is her plan from a year ago to provide a $500 check to every taxpayer here in the state of Michigan?” said Nesbitt. “She proposed that a year ago, why wasn’t that part of the first plan to come out? I think a lot of hard-working folks could use a $500 check today.”
