On Tuesday, Gov. Gretchen Whitmer made significant changes to Michigan’s tax code by signing legislation that essentially undoes significant modifications her predecessor made over ten years ago to the tax bills of seniors and low-income individuals.
In 2011, then-Gov. Rick Snyder signed into law a business tax reform plan that abolished full and partial exemptions for public and private pensions and slashed the state’s Earned Income Tax Credit (EITC), which helps subsidize the wages of low-income households.
At a signing ceremony, Whitmer stated, “A single bill struck a critical blow to people’s finances 12 years ago. “Money that was promised to seniors was taken away from them. A lifeline was severed for working families who were only one missed paycheck from being indigent. We are making it right now because it was wrong back then.”
The first legislation put up in the newly Democratic-controlled legislature called for restoring pensioner tax exemptions, a cause Whitmer has long backed. Whitmer also pledged to increase the state’s EITC when the year began.
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The Whitmer-signed version of Bill 4001 evolved into a proposal that increases the state’s EITC from 6% to 30% of the federal tax credit and taxes retirement income in the same manner as private pensions did before Snyder’s revisions. Eligible taxpayers will save an average of $750 thanks to the enhanced EITC.
Whitmer and Democratic leaders also sought to provide $180 “inflation relief checks” to all Michigan taxpayers, but they were unable to secure the support of Republicans to pass the measure. Surplus state revenues could cause a reduction in Michigan’s state income tax from 4.25% to 4.05% since the expenses of the proposed checks are expected to prevent an automatic rollback of the income tax.
If the universal income tax decrease is implemented, Whitmer indicated she will wait for additional details on the state’s financial situation. She stated, “I believe there is work still to be done to close the books. Democrats had intended to impose the retirement and EITC tax relief by the April 18 tax filing deadline, but the absence of GOP backing delays its implementation.
The Republicans wouldn’t cooperate with us to accomplish that, Whitmer said.
“I would want to be able to say we got immediate effect and everyone is going to experience this quickly,” she said.
While the tax package was approved by the state Senate on a party-line vote, Democrats needed the help of one Republican lawmaker, Rep. Mike Mueller, R-Linden, to pass the legislation in the state House. He claimed in a Facebook post that the cuts offer working-class families and seniors significant relief.
Only one Democratic legislator, state representative Dylan Wegela of Garden City, voted against the tax plan because it would have put up to $1.5 billion into a fund for state economic development.
