Michiganders will be getting tax relief in the coming months. The debate in Lansing is about how much, who gets it and then who gets the credit.
The state made so much money in the past year that an eight year old law, passed by Republicans, is set to give an automatic income tax cut. That is if Democrats, who are now in control, don’t take steps to avoid the automatic trigger.
“I hope that there’s no funny business,” said Se, Aric Nesbitt, the Senate Minority Leader. “We’re calling on them not to mess with the income tax cut.”
There are three major tax relief plans on the table right now in Lansing:
- Repeal of the ‘retirement tax’
- Expansion of the Earned Income Tax Credit
- An automatic income tax cut from 4.25% to 4.05%
“These are the policies that are really going to be helpful to people,” said Gov. Gretchen Whitmer at a press conference last week. “I’m hopeful and glad to see the movement in the legislature.”
The Democrat-controlled legislature will have to approve the retirement tax and EITC plans but nothing has to be done on the income tax cut.
“The Democrats shouldn’t touch it,” said Rep. Matt Hall, House Minority Leader. “Because that would be a tax increase and the people in Michigan need a relief now.”
Democrats have no plans to repeal the law but so far that tax break is just a projection.
“I think that there are a lot of things that will go into determining whether or not it’s even something that might even happen,” said Gov. Whitmer.
The state could still spend more money, thus lowering revenues and no longer triggering that cut.
“I will remain focused on trying to ensure that Michigan competes and wins for every opportunity and that means we’ve got to have robust economic development tools that we leaned on to land record investments,” said Gov. Whitmer.
While not directly saying it, Whitmer has pushed for more economic development investment. That means boosting the SOAR fund, the pool of money for business incentives and development.
“I think that’s going to be important that we are able to continue to put her foot on the gas and not have to go out every moment and come back and find some more tools,” said Gov. Whitmer. “I think it’s going to be important for the long-term security of Michigan.”
Right now money is given project by project, Gov. Whitmer seems to want to fund it permanently.
“I do think that we’re analyzing it,” said Gov. Whitmer. “We are going to take a look at it, but closing the books is step one.”
“I was really surprised they were talking about potentially taking away or doing things to prevent this tax rollback,” said Sen. John Damoose, Republican from Harbor Springs. “We can’t do that.”
Gov. Whitmer believes the impact and money savings from SOAR investment, retirement tax repeal and the EITC expansion will be much more impactful to Michiganders’ wallets than 0.2% savings on income taxes.
“These are real meaningful ways that we can help people right now,” said Gov. Whitmer.