Brian Calley President and Chief Executive Officer at Small Business Association of Michigan | LinkedIn
Brian Calley President and Chief Executive Officer at Small Business Association of Michigan | LinkedIn
The proposal to reduce the state's income tax rate from 4.25% to 4.05% has advanced out of a House committee, moving closer to becoming law. The bill, known as HB 4170 and sponsored by Representative Kathy Schmaltz (R-Jackson), was discussed at the House Finance Committee meeting on Tuesday morning.
According to testimony during the session, this reduction could save the average taxpayer up to $140 annually. "That's a lot of money for people," said Schmaltz. "We forget about that. That means a lot to people, even though it sounds like a small amount."
The bill received unanimous support from Republican committee members, while some Democrats either abstained or voted against it. Representatives Kelly Breen (D-Novi) and Jason Hoskins (D-Southfield) did not vote, whereas Tyrone Carter (D-Detroit), Cynthia Neeley (D-Flint), and Stephanie A. Young (D-Detroit) opposed the measure. Rep. Veronica Paiz (D-Harper Woods) was absent.
Breen questioned how the estimated $539 million state revenue loss would be managed since HB 4170 retroactively applies from January 1 of this year. She expressed concerns about potential budget cuts affecting road repairs and other services: “What are we cutting in the current budget? What are we not going to pay for?” she asked Schmaltz.
Schmaltz defended the proposal by highlighting that the Governor's proposed budget is significantly larger than last year's and criticized certain allocations as unnecessary spending: “I can’t think of a better use for our money than giving it back to taxpayers,” she stated.
House Speaker Matt Hall (R-Richland Township) indicated that a vote on the bill would occur soon but did not specify when.
Republicans have positioned this tax cut as reversing an "income tax hike" they claim was orchestrated by Democrats following Attorney General Dana Nessel’s opinion in 2023 regarding income tax reductions linked to inflation rates.
Historically, Michigan's income tax rate has varied between 6.35% and 3.9% since 1972, with adjustments made during different administrations due to economic conditions such as the Great Recession.
Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter
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