By David Eggert
Associated Press
LANSING (AP) - The GOP-led Michigan Legislature commenced a new two-year term Wednesday, and Republicans wasted no time in proposing major tax cuts as new leaders took the helm of the House.
While House members were being sworn in and picking their seats, Sen. Jack Brandenburg was collecting signatures in the Senate for a proposal to eliminate the 4.25 percent income tax over five years. It would drop to 4 percent in the first year and 1 percentage point each year after. In the House, legislation was introduced to lower the income tax to 3.9 percent in 2018 and a tenth of a point annually until the tax's elimination in about 40 years. Seven states have no income tax.
"Nobody's kicking the door down to come to Michigan. I think we need a game changer, and I think this is it," Brandenburg, a Republican from Macomb County's Harrison Township, said of his plan, which will officially become legislation next week.
Republicans have the same legislative majorities as before, 63-47 in the House and 27-11 in the Senate, and will again control the agenda. The GOP's emphasis on tax relief early in the session indicates it is a priority.
Ending the income tax would reduce yearly revenues by roughly $10 billion initially, a loss critics said would result in massive cuts to government services.
"The complete elimination of the income tax is not feasible," said new House Minority Leader Sam Singh, an East Lansing Democrat. "You cannot take that amount of revenue out of the state budget without devastating our schools, our local communities, our fire and safety and other key institutions of the state. To me, it's more political theatre."
Republican Gov. Rick Snyder to date has largely not embraced a large tax cut for individuals and has instead favored business tax reductions. As part of a road-funding plan that raised fuel taxes and vehicle registration fees, he agreed to an expanded tax credit for residents with household incomes below $60,000, beginning in the 2018 tax year. The deal also included annual reductions in the income tax starting in 2023 if general revenues outplace inflation by a minimum amount.
"The governor is always open to new ideas and welcomes the discussion on tax reform," spokeswoman Anna Heaton said. "For this particular proposal, there would need to be concrete data to demonstrate that there is adequate revenue from sources besides the income tax to ensure services for residents and investing in our statewide infrastructure would not be adversely affected."
The state's general fund, its second-largest account, is financed primarily with income taxes. It already will be squeezed in coming years under the Medicaid expansion and the road-funding deal that shifts funds to the transportation budget.
But House Speaker Tom Leonard, a DeWitt Republican who was formally elected the leader Wednesday, said in a statement that it is time to "undo the mistakes of the past and return hundreds of millions of dollars back to the people who earned them in the first place."
When Snyder took office in 2011, he and GOP lawmakers mostly offset a business tax reduction with an increase on individuals. The move included taxing retirement income, scaling back exemptions and credits, and not letting the income tax rate - which rose to 4.35 percent in 2008 in a budget-balancing deal - drop to 3.9 percent as planned.
The first day was primarily one of pomp, swearing-in ceremonies and proud moments for new representatives who serve two-year terms. Senators are in the middle of four-year terms.
In a speech to his fellow 109 House members, Leonard pledged to restore civility in the House, pointing to what he said was one of the most "uncivil" election cycles in American history.
"I believe that over the next two years, the citizens of our state not only want to see more civility in our political process. I believe they are going to demand it from us," he said.
Legislators will meet next week to hear Snyder's yearly State of the State address. His budget proposal is expected in February and will be based on numbers to be set Thursday at a revenue-estimating meeting. Legislative economists say revenues are slightly higher than projected previously.
Published: Fri, Jan 13, 2017
