LANSING, Mich. — State Sen. Jon Bumstead on Thursday voted against a partisan scheme to stop an automatic state income tax rate cut from going into effect.
“Right now, too many Michiganders are struggling with the increased costs of everyday essentials while our state is sitting on a substantial $9.2 billion surplus,” said Bumstead, R-North Muskegon. “We have the means to shape policy that could positively impact the financial health of our residents. Instead, we are taking up legislation that picks winners and losers.
“All seniors with retirement income deserve tax relief, not just those who have a public or private pension. This bill also ensures the soon-to-be-triggered permanent income tax reduction does not go into place and hands out a one-time $180 check instead.”
Under a 2015 law, an automatic and permanent reduction to the state income tax rate is triggered if revenues in Michigan’s general fund increase past a certain point. The House and Senate fiscal agencies estimate that Michigan was $700 million over the trigger’s threshold in fiscal year 2022, which would reduce the income tax rate from 4.25% to 4.05%.
House Bill 4001, as enrolled, would stop that cut by retroactively moving $800 million from the general fund to a new fund to provide one-time $180 rebates in 2023 and then directing over $1.4 billion over the next three years to the Strategic Outreach and Attraction Reserve (SOAR) Fund. It would also increase the state’s Earned Income Tax Credit (EITC) from 6% to 30% of the federal EITC beginning with the 2022 tax year and phase-in over four years an exemption on certain retirement income from the state income tax, such as public retirement or pension benefits.
“We should be utilizing our state’s budget surplus to pay down our debts and lower our personal and corporate income tax rates to stay competitive with neighboring states and attracting talent. We should not be taking taxpayer dollars and handing them to large corporations in the hopes that they will come to Michigan and stay. Michiganders deserve better,” Bumstead said.