EDITOR’S NOTE: This story has been updated with new information as well as comments from the Grand Rapids Area Chamber of Commerce.
Lansing Republicans passed another election-year tax cut plan that would cut personal income taxes, increase Michigan’s earned income tax credit, and create a $1,000 tax credit. $500 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 that afternoon in a 22-14 vote. The House followed suit hours later in a 69-34 vote.
Whitmer, who in March vetoed an earlier tax cut plan passed by Republican lawmakers and is expected to veto the new package, pushed for lower retirement income taxes and higher credit earned income tax for low-income workers. The GOP plan presented this week includes versions of both.
The latest Republican tax cut plan comes as the House Tax Agency and the Senate Tax Agency released new forecasts this week showing state revenue is trending higher for the fiscal year in current and 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 4568, which was before the Legislature today.
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. .
Whitmer’s expected veto would lead to negotiations with GOP lawmakers over the next month and a half as the administration and legislature face a June 30 deadline to pass a budget for the fiscal year 2023 that begins June 1. october.
“The state government is sitting on massive surpluses. Responsible tax relief for citizens and businesses should be a priority for our elected officials in Lansing and we are pleased to see that discussion continuing today,” said Andy Johnston, senior vice president of strategy and strategic commitment to Grand Rapids Area Chamber of Commercewrote in a statement to MiBiz. “As the Legislative Assembly and the Governor work to finalize a budget, we urge them to make tax relief for small businesses and an increased working income tax credit top priorities. , we hope to see improvements in our long-term competitiveness through paying down debt, eliminating the business personal property tax, and using one-time dollars to invest in transformational projects.
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 framework of 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.
Never miss the biggest stories and breaking news from MiBiz. Sign up to receive our reports straight to your inbox every weekday morning.