According to a comprehensive tax proposal approved by the state Senate late on Tuesday night, Michigan taxpayers will not receive $180 checks, meaning that Gov. Gretchen Whitmer will not be able to fulfill a key campaign pledge she made at the beginning of her second term.
If approved by the governor, the package will gradually eliminate taxes on public and private pensions while also assisting lower-income families by substantially increasing the state’s earned income tax credit from its present level of 6% to a 30% match of the federal rate. Also, it could give the state’s business incentive fund up to $1.5 billion.
Senate Democrats Votes
Yet despite weeks of discussions and a nearly 13-hour session day on Tuesday, Democrats were unable to win the approval of Republicans for a proposal that would have provided $180 checks to each taxpayer.
However, despite having a 20-18 advantage, Senate Democrats were unable to secure the 26 votes required by April 18 to pass the measure.
House Bill 4001 would have retroactively transferred $800 million in general fund receipts from the fiscal year 2022 to the Michigan Taxpayer Refund Fund if it had been approved with immediate effect.
A 2015 statute that reduces the personal income tax rate from 4.25% to 4.05% if the state’s general fund grows faster than the rate of inflation in any year beginning in 2023 would not be triggered by the $800 million diversion.
The Senate passed a bill late Tuesday night that would exempt certain retirement income from state income taxes over a four-year period and increase the EITC from 6% to 30% of the federal EITC starting with the 2022 tax year.
According to Whitmer, the proposal will eliminate the retirement tax, saving 500,000 households an average of $1,000 annually, and quintuple the Working Families Tax Credit, giving 700,000 Michigan residents an average refund of $3,150.
A housing and community development fund would receive $50 million, a fund for revitalization and placemaking would receive $50 million, and the Strategic Outreach and Attraction Reserve fund would receive approximately $500 million annually for three years.
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Michigan Tax Breaks
Whitmer praised the passing of tax relief for low-wage workers and pensioners in the state on Tuesday in a statement released early on Wednesday. She said that this would put money back in people’s pockets to help them pay the bills and put food on the table.
By contributing $500 million per year in corporate income tax receipts to the fund through 2026, a maximum of $1.5 billion over three years, the package also provided continued money for the state’s business incentive initiatives.
By offering tax incentives, the Strategic Outreach and Attraction Reserve has been used to draw significant major business initiatives to the state. The fund has come under fire from Republicans for being a business slush fund.
A substantial tax incentive package was authorized earlier this month for a $3.5 billion Ford investment slated for the state. For the project, the state expects to invest over $1 billion in tax incentives and site improvements.
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