Breaking News: Michigan House Reveals Their Tax Plan For MI

Governor Whitmer revealed her tax plan for Michigan in her State of the State address. Her plan consists of:

rolling back the taxes on all public pensions and some private pensions
and increasing the Earned Income Tax Credit 333% to its 2011 level of 20%.

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Michigan’s Republican-controlled Senate then came out with their new tax plan for Michigan. That plan consisted of

reducing Michigan’s individual income tax rate from 4.25% to 3.9%
reducing the corporate income tax rate from 6% to 3.9%.
allow people aged 67 and older to receive a deduction against $30,000 in income on a single income tax return. Those filing joint returns could receive deductions for $60,000 in income.

Back in 2007 Governor Granholm and her compadres in the legislature raised our state taxes “temporarily” from 3.9% to 4.35% to avoid a Michigan government shutdown. Granholm and the Democrats who controlled the House and the Republicans who controlled the Senate decided they needed to increase our state tax by 11.5% instead of cutting their budgets. They not only promised but wrote in the law “Beginning on October 1, 2011 and each October 1 after 2011, the maximum rate under this subsection shall be reduced by 0.1 each year,” reverting to 3.9% “on and after October 1, 2015.”

Last night I spoke with House Tax Policy Committee Chairman Matt Hall, R – Marshall about the Houses tax plan. Would they agree with the Michigan Senate and vote on their bill or create their own. He informed me they have created their own and that plan will be made public at their committee hearing this morning. He informed me of the plan and asked me if he could come on my radio show to discuss it with my listeners.

The House plan will consist of the following:

reducing Michigan’s individual income tax rate from 4.25% to 3.9%
lower the age from 67 to 62 to receive a deduction against $20,000 in retirement income (i.e. pensions, 401k, 403b and IRA’s) on a single income tax return. Those filing joint returns could receive deductions for $40,000 in income.
lower the age from 67 to 62 to receive a deduction against $20,000 in income, non-retirement on a single income tax return. Those filing joint returns could receive deductions for $40,000 in income.

The House Republicans must have been thinking the same way as I did. I spoke to Rep. Hall just about an hour after I finished a piece I published this morning titled “In The Name Of 'Fairness' If Pensions Should Not Be Taxed In Michigan Should 401K’s Also Not Be Taxed”. In which I stated it would only be fair if we were to not tax or tax all retirement income in the same manner.

I will be speaking with the House Tax Policy Committee Chairman Matt Hall, on my show today at 9:45 am. If you cannot listen to it live please listen to my podcast of that interview.