The State Senate passed two bills Thursday,
following the House’s path toward returning a portion of the State’s extra
revenue to Michigan taxpayers through adjustments to the individual income tax
rate and personal exemption amount. The two bills are headed to Governor Rick
Snyder’s desk for approval.
House
Bill 5699, introduced by Representative Ed McBroom (R-Vulcan), proposes to
reduce the individual income tax rate from 4.35 percent to 4.25 percent
effective October 1, 2012. The rate is scheduled to do so on January 1st
of 2013 – the legislation will accelerate the schedule. The Senate passed the
measure 31-7 with Democratic Senators Glenn Anderson (Westland), Steve Bieda (Warren),
John Gleason (Flushing), Tupac Hunter (Detroit), and Gretchen Whitmer (East
Lansing voting “yes” with the Republicans.
House
Bill 5700, introduced by Representative Holly Hughes (R-White River
Township) will increase the personal exemption by $250 (from $3,700 to $3,950)
effective October 1, 2012, an additional $50 on January 1, 2014 and yet another
$100 on January 1st of 2017. This measure picked up an additional
vote, passing 32-6. Democratic Senator Virgil Smith (Detroit) joined the five
Democrats from HB 5699 in support.
The movement of the measures was
complicated this week when the Senate Fiscal Agency numbers pegged the tax
reform package’s cost at roughly $12 million higher than the $90 million agreed
to by the Governor, Senate Majority Leader Randy Richardville (R-Monroe), and
House Speaker Jase Bolger (R-Marshall). The Snyder Administration reportedly
first wanted the Legislature to amend the reform so that it met the original
numbers; however, Senate Republicans quickly voiced opposition to the move that
could be perceived as weakening the tax cut. The leaders settled on allowing
the tax reform to move as is and the Legislature being responsible for finding
the additional $12 million.
Further throwing a wrench into
the process was the introduction of an amendment by Senator Coleman Young II
(D-Detroit) to completely eliminate the individual income tax. The amendment
was defeated 16-21.
The House, meanwhile, passed
another bill, House
Bill 5729, to decrease the income tax rate even further – to 3.9 percent by
2018. The legislation, sponsored by Representative Nancy Jenkins (R-Clayton)
passed 97-13. The move would cost an estimated $1.8 billion in revenue to the
State.