Battle Creek May Lose Non-Resident Income Tax Option
At a time when cities and towns across Michigan have been reeling from big revenue cuts due to the COVID-19 outbreak, it might get worse. The Michigan State House Tax Policy Committee is beginning debate on legislation to prevent cities from imposing an income tax on non-residents who work within the city limits. Battle Creek is among the cities in Michigan that would be directly affected by the bill. The city processes about 40,000 personal income tax filings from residents and non-residents each year.
Marshall Republican State Representative Matt Hall chairs the Tax Policy Committee. He presided over about a half hour’s worth of debate on the bill yesterday but no vote was taken. He’s telling reporters at the state capitol that it’s the start of the review, brought on in part by workplace dynamics due to the COVID-19 impact on businesses.
Republican State Representative Pamela Hornberger from Southeast Michigan is the primary sponsor of the legislation. She has been pushing the "taxation without representation angle". She’s been saying people should not be forced to pay taxes to a governmental body where they are not directly represented. Wayland Republican Representative Steve Johnson applauds that position. He’s quoted by the Detroit News as saying “Thomas Jefferson would be proud”.
But there are no quick and fast answers to the issue. Battle Creek and 23 other cities in Michigan levy non-resident taxes. Critics of the legislation say the revenue needs to be replaced in some fashion if the non-resident taxes are eliminated. Law 360.com has reported on recent efforts by the Michigan Municipal League to even expand tax options for cities and towns.
The non-resident tax ban is not a new idea. Similar legislation introduced in the State House in 2019 didn’t get enough support to move out of committee. There’s no word on the next hearing for the tax bill.