At the start of the Snyder administration, I led the passage and implementation of major state tax reform to simplify our tax code, cut taxes and create jobs. Those goals were accomplished, and Michigan has been on the comeback ever since. Our business tax ranking improved from 49th to 8th, more than 532,000 jobs have been created, and people are moving back to Michigan.
The same kind of federal tax reform has been needed for a very long time. Finally, the country has taken a major step forward in competitiveness and letting hardworking Michiganians keep more of what they earn. Thanks to President Trump and Congress having the courage to usher in a new era of American prosperity, the median family of four will save a little over $2,000 each year in federal taxes.
Because state taxes are affected by the federal tax system, the changes made at the federal level mean we need to make some important adjustments to Michigan’s income tax. I encourage the Michigan Legislature to move swiftly to ensure that our hardworking taxpayers retain the maximum benefit of the federal tax cuts.
The recent federal tax reform essentially eliminates personal exemptions in favor of a large increase in the standard deduction. That’s a great change because it means lower federal taxes and a simpler federal tax return for more Michiganians. Unfortunately, under current Michigan laws, this change prevents people from applying personal exemptions at the state level.
Taxes should be simple, fair and low. That’s why we need to change the state’s tax law to restore personal exemptions in Michigan, which are set at $4,000 for the tax year 2018. This is the simplest and most equitable way to ensure that Michiganians receive the full benefit of the federal tax cut without creating winners and losers at the state level. I’m also proposing that we increase personal exemptions to at least $4,500 by the year 2021.
I’m a big believer that, in most cases, the simplest solution is the best solution. In this case, restoring and increasing the state personal exemption is a simple change with a big benefit for Michigan taxpayers.
Brian Calley is lieutenant governor of Michigan and a Republican candidate for governor.