Governor says Michigan Senate's $2.5B tax cut plan isn't sustainable

Craig Mauger
The Detroit News

Lansing — Gov. Gretchen Whitmer argued Wednesday against the idea of a broad tax cut and said she doesn't believe a $2.5 billion proposal approved by the state Senate to decrease income tax rates is sustainable.

Whitmer, a Democrat, made the comments during an event at Lansing Community College after she gave a presentation that focused on her new $74 billion budget proposal. She told the crowd the state needs to be able to afford any potential tax reduction.

"We've got to be really smart," the governor said. "The tax cuts that I proposed we can pay for with ongoing revenue expectations. The $2.5 billion tax cut that the Senate passed yesterday, I don't believe is sustainable and would undermine our ability to fund things like education and infrastructure and public safety."

On Tuesday, the Republican-controlled Michigan Senate approved a sweeping $2.5 billion tax cut plan that would drop the corporate income tax rate and the individual income tax rate. It would also provide additional tax reductions for retirees and people with children.

GOP lawmakers and Whitmer are expected to spend the next months debating how to handle billions of dollars in surplus money currently in government coffers. Whitmer has advocated for smaller tax cuts targeted at seniors and low-income workers, including boosting the state's earned income tax credit.

Whitmer said she preferred a "strategic" tax break "for people that were forced to change their whole lifestyle to be able to keep their head above water" instead of providing a small amount of money for every single person in the state. The latter idea would "not make a lot of sense" and would "not have a meaningful improvement in the quality of life of people we know are struggling in this moment," the governor said.

The Senate GOP plan passed in a party-line vote on Tuesday. It would reduce the individual income tax rate from 4.25% to 3.9% and the corporate income tax rate from 6% to 3.9%. The proposal still has to go to the Michigan House before reaching Whitmer's desk, where she could veto it.

Senate Majority Leader Mike Shirkey, R-Clarklake, blasted Whitmer's comments on Wednesday.

"Unsustainable? Really? That response demonstrates lack of sincerity in helping people endure the runaway inflation that her orders and mandates materially contributed to," Shirkey said. "This would be the perfect budget to demonstrate it is not only sustainable but very appropriate. It's a matter of will."

Senate Republicans have also argued the state should return surplus funds to taxpayers.

"The time is now to let every Michigander keep more of what they earn so they can deal with this tax hike," Sen. Michael MacDonald, R-Macomb Township, said. "Because make no mistake. That's what inflation is, an invisible tax increase, making it harder to buy things like groceries, heat homes and pay bills."

The state's next fiscal year begins on Oct. 1.

Staff Writer Beth LeBlanc contributed.