House OKs Tax Relief Plan

The House Tax Policy Committee reported a package of bills that would roll back the individual income tax to 4.05 percent by 2016 and provide a trigger to continue the rollback based on the state’s revenue. This makes it the second proposed plan decreasing the income tax rate to advance from a legislative committee.

HB 5265, HB 5266, and HB 5267 were reported on votes of 12-2 with State Representative Vicki Barnett (D-Farmington Hills) abstaining. Representatives Jon Switalski (D-Warren) and Jim Townsend (D-Royal Oak) voted no.

The bills would reduce the income tax rate to 4.15 percent in October 2015, which would be further reduced to 4.05 on January 1, 2016. The package would then, beginning October 1, 2017, reduce the tax rate by 0.1 percent if the General Fund revenue in the preceding year increased by $300 million or more, adjusted for the rate of inflation for that year.

The Senate has introduced their own plan to reduce the rate to 3.9 percent by 2017.

Governor Snyder has been critical of the reduced income tax rate and has proposed his own plan, which would expand the Homestead Property Tax Credit, focusing on lower and middle income taxpayers.

Representative Jim Townsend (D-Royal Oak) has criticized the income tax rollback plan for giving more of a tax break to high earners than the middle class.

Ari Adler, spokesperson for House Speaker Jase Bolger (R-Marshall), said Mr. Bolger has not endorsed a tax plan yet. He said conversations will continue between House leadership, Senate leadership, and the Governor’s office.

Representative Barnett (D-Farmington Hills) offered a series of amendments that would tie the package to House Democratic priorities including reinstating the exemptions on pension income, reinstating the Earned Income Tax Credit to its original cap, and allocating funds to the road fund and School Aid Fund rather than rolling back the income tax.

Representative Bill LaVoy (D-Monroe) offered two amendments on the final bill in the package that would require a decrease in the state’s debt for the trigger on the continued rate rollback to be pulled. All Democratic amendments were defeated, while Republicans offered no amendments to the legislation.

Representative Farrington (R-Utica), Chair of the Committee, said he thinks that the issue raised by Representative LaVoy warrants further discussion and is valid. The ten Republican members abstained from voting on Rep. LaVoy’s amendment rather than voting no.

posted by PAA Online , Friday, February 21, 2014 11:19 AM
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