Senate GOP takes 2nd look at charitable tax credits
Lansing — Senate Republicans are looking to revive tax credits for charitable giving that were eliminated in 2011 as part of a major tax code overhaul approved by the GOP majority and backed by Gov. Rick Snyder.
The Senate Finance Committee on Tuesday unanimously advanced a four-bill package that would again allow Michigan residents to claim a 50 percent tax credit on the first $100 they donate to places like public libraries, homeless shelters and food banks.
Married couples could qualify for a tax credit of up to $200 under the legislation, which now heads to the floor, where Senate Majority Leader Arlan Meekhof, R-West Olive, is interested in considering it further, according to his spokeswoman.
The credits would help groups that provide a “common good” for society, said Sen. Patrick Colbeck, R-Canton, who sponsored one of the bills.
Some organizations “have suffered” since the credits were eliminated, said Sen. Tonya Schuitmaker, R-Lawson, another sponsor.
The package would also re-establish a $50 state credit for taxpayers who donate a used vehicle to a qualifying organization and allow adoptive parents to claim a credit of up to $1,200 for related expenses.
All told, restoring the tax credits could cost the state about $50 million in annual revenue, said Howard Ryan of the Michigan Treasury, which opposed the bills.
“The policy in 2011 was to simplify the tax code, and by getting rid of a lot of this complexity, we did simplify the tax code,” Ryan said.
The tax code rewrite was done in partnership with the governor and Legislature, he continued. “We felt it was good policy then, and we still feel it’s good policy.”
The 2011 tax code change was projected to slash state business taxes about $1.65 billion a year but increase individual income tax liability $1.4 billion through elimination of credits and exemptions.
Democrats have long called for the restoration of some individual credits, but they have little power in Lansing. The Republican-sponsored Senate legislation has a better chance at passage.
Senate Finance Chairman Jack Brandenburg, who has pushed various forms of tax relief since the 2011 change, said he was not fazed by Tuesday’s opposition from Treasury.
“Treasury speaks out against most of the legislation that we run out of here,” said Brandenburg, R-Harrison Township.
Representatives from charities and nonprofits spoke in support of the bills, including Rob Collier of the Council of Michigan Foundations, which in 2013 commissioned Grand Valley State University to study the elimination of the charitable giving tax credits.
“What we’ve seen in those two years is a dramatic reduction, a huge reduction, in the pipeline for new donors,” Collier said. “And we know over the 20 years we had the tax credit that a lot of those donors became regular givers.”
Rachel Richards, a policy analyst with the Michigan League for Public Policy, said the state moved “in the wrong direction” by eliminating the charitable tax credits. She pointed to the recent Flint water crisis as evidence of the need to encourage support for nonprofits, which are assisting the state on the ground.