LANSING, Mich. — State Sen. Rick Outman voted no on a Democratic effort to eliminate the income tax rollback.
“I cannot understand why Democratic leadership is working so hard to make sure the income tax reduction doesn’t happen. For the last month and a half, we’ve heard nothing but promise after promise to provide relief to people — several of which even came from our governor during her State of the State address,” said Outman, R-Six Lakes. “Yet Democrats in both the House and Senate are jumping through legislative hoops to make sure an income tax reduction doesn’t happen.”
Under a 2015 law, if revenues in Michigan’s general fund increase past a certain point, an automatic and permanent reduction to the state income tax rate is triggered. Revenues were up again according to a recent revenue estimating conference, which would trigger a reduction in the state’s income tax rate from 4.25% to 4.05%.
House Bill 4001 would stop the income tax reduction by retroactively moving $800 million from the general fund to a new fund to provide one-time $180 rebates in 2023 and would move more than $1.4 billion to the Strategic Outreach and Attraction Reserve (SOAR) Fund over the next three years.
Also now included in the plan is an increase the state’s Earned Income Tax Credit (EITC) from 6% to 30% of the federal EITC and a phased-in exemption on certain retirement income from the state income tax, such as public retirement or pension benefits — which were their own pieces of legislation but has now been lumped together with this large spending bill.
This spending move, which Outman called a “deliberate and backdoor scheme,” puts the general fund balance below the threshold to trigger a rate reduction for Michigan workers.
“This is exactly the scenario my colleagues and I feared and warned about,” Outman said. “We saw this coming, called on Democratic leadership to ensure the reduction would take place, and introduced efforts to make sure everyone saw some form of tax relief. Democrats voted down every single one.
“This effort was rushed through the Legislature and only helps a small, hand-selected part of the population, while once again leaving middle class families — the ones who were on the receiving end of the many Democratic promises — in the dust.”