Michigan's higher tax revenue should trigger tax relief, House chair urges
House Appropriations Chairman Thomas Albert has called for "targeted and sustainable tax relief" for Michigan residents in light of increased inflation and Michigan's higher than expected tax revenue, a proposal that his Senate counterpart said he would discuss.
The Lowell Republican suggested Friday the plan should be part of the state's budget negotiations, which will be launched in the coming weeks with Gov. Gretchen Whitmer's annual budget presentation.
“Runaway inflation brings more tax revenue to state government at the expense of hard-working taxpayers, hurting their family budgets," Albert said in a statement. "With state tax revenue projections well ahead of previous expectations, it is time we talk about tax relief rather than increasing ongoing government spending."
Albert didn't suggest a specific tax relief plan but said he's open to working with the Republican-controlled Legislature and Democratic governor to find consensus.
Sen. Jim Stamas, R-Midland, said he is open to discussions on tax relief. He noted the discussion would take several elements into account including state obligations, services and programs as well as the duration of the tax revenue increases.
"If there’s ever an opportunity to leave money in Michigan families’ pocketbooks versus the government spending it, I don’t think that’s a bad thing," said Stamas, chairman for the Senate Appropriations Committee. "I’m happy to have a conversation and see where it goes.”
In response, Gov. Gretchen Whitmer's off noted Friday that the governor had worked to lower car insurance costs and taxes on feminine hygiene products in an effort to save residents money.
"Gov. Whitmer will announce a plan in her State of the State address to keep her foot on the gas to make our state a place that puts more money in people’s pockets and gets more Michiganders back to work, so that we can continue our strong economic progress," Whitmer spokesman Bobby Leddy said.
Michigan's available tax revenue for fiscal year 2022 is expected to come in $1.7 billion higher than was initially forecast in May 2021, the state announced last week. Upward adjustments were also made last week to tax revenue for fiscal years 2023 and 2024 for a total increase of roughly $7 billion over the three fiscal years.
In addition to the higher state tax revenue, Michigan has remaining about $7 billion in federal COVID relief funds, $7.3 billion for federal highway programs and at least $563 million in federal aid through a bipartisan infrastructure bill.
That federal money largely is prohibited from being used to lower taxes, but Albert argued the state tax revenue could be used to provide tax relief for families struggling with inflation, supply chain issues or workforce shortages.
"There are many potential relief options including an income tax rollback, increased income tax deductions for retirees and families, property tax reduction, and the list goes on," Albert said. "As long as the reduction is fairly applied, it should be on the table."
Sen. Jim Runestad, R-White Lake, called for tax cuts last week after the state's Consensus Revenue Estimating Conference agreed on the new estimates for state tax revenue.
“In light of the CREC report, there is no excuse for continuing to overtax Michigan residents," said Runestad, who chairs the Senate Finance Committee. "Government works best when the people are not overtaxed and can make their own decisions on what they want to support with their hard-earned dollars.”
The GOP-led Legislature routinely has bills proposing tax cuts on everything from individuals to businesses to pensions waiting in the wings, but it's not clear which if any of those proposals might be used to create the proposed tax relief.
In December, Sen. Aric Nesbitt, R-Lawton, introduced legislation that would cut individual and corporate income taxes as well as create a $500 child tax credit — a bill that 15 of his GOP colleagues co-sponsored, including Senate Majority Leader Mike Shirkey of Clarklake.
The bill would lower the corporate income tax from 6% to 3.9% and the individual income tax from 4.25% to 3.9%.
Nesbitt said the bill was introduced in response to the state's tax revenue increases as well as funding programs launched late last year to give businesses an incentive to move to Michigan.
"If we’re going to get serious about growing the economy and attracting people and businesses to the state, I consider that a real economic incentive” to offer lower taxes, he said.