A Michigan lawmaker wants to slash the state personal income tax from its current 4.25 percent to 3.9 percent in 2021.
Starting in 2022, HB 5337 would drop the income tax by 0.1 percent each year until it reaches zero.
State Rep. Rodney Wakeman, R-Saginaw Township, said his plan would allow Michigan families to keep more of their money through previously promised state income tax relief.
Michigan first enacted a 2.6 percent income tax in 1967 until it jumped to 3.9 percent in 1972. It has remained above four percent for the majority of years since then, peaking at 6.35 percent in 1983.
The Legislature in 1999 voted to reduce the income tax by 0.1 percent for five years to 3.9 percent, but the state’s economic depression and a near government shutdown in 2007 led to former Democratic Gov. Jennifer Granholm “temporarily” reverting the income tax to 4.35 percent.
That tax increase triggered a 0.1 percent per year income tax reduction to 3.9 percent by 2015, according to The Citizens Research Council of Michigan, but it never happened because the Income Tax Act was amended to the current 4.25 percent in 2012.
President of Americans for Tax Reform Grover Norquist told The Center Square that Democratic Gov. Gretchen Whitmer should keep Granholm’s promise to lower income taxes.
“It’s on the Governor to fix the lie of Granholm,” Norquist said, adding that promised temporary taxes are problematic.
Norquist said people build factories and invest in plants for the next 20 years, not for two years, and act on those promises.
“I think that the path for Michigan or any of the Midwest states is to become the first Midwest state with no income tax,” Norquist said, pointing to growth in Florida, Nevada, Tennessee and Texas, each of which has no income tax.
Businesses are much more interested in the direction of tax policy, and would rather go to a high-tax state that’s cutting taxes than a low-tax state that’s raising taxes, Norquist said.
Wakeman said his plan would fulfill that decade-old promise.
“Whether it’s a phone call, letter, at monthly office hours or at a community event, one of the top requests I’ve heard from Saginaw County families since coming to Lansing is to deliver tax relief,” Wakeman said.
“This is about restoring people’s trust in government by making good on a promise made to Michigan taxpayers over 10 years ago. For too long, tax spenders have gotten their way. Now it’s time to give hard-working families a break by delivering long-overdue tax relief.”
The House or Senate fiscal committees haven’t analyzed the bill.
Wakeman’s measure is expected to be referred to the House Tax Policy Committee.