House GOP scales back income tax cut plan, waits to vote

Feb 22, 2017

Michigan House Republicans on Tuesday significantly revised their income tax cut plan, proposing to drop the 4.25 percent rate to 3.9 percent over four years and no longer calling for the tax to be phased out entirely over decades.

LANSING, Mich. (AP) — Legislation that cleared a committee last week would have cut the tax to 3.9 percent in 2018, saving taxpayers $680 million in the next fiscal year and $1.1 billion the following year, according to the nonpartisan House Fiscal Agency. The bill also would have eliminated the tax by 2057.

Under the new version — which Republican Gov. Rick Snyder remains concerned about for budget reasons — the tax would drop by one-tenth of a percentage point annually from 2018 through 2020 and then 0.05 percentage points in 2021, a slower return to the 3.9 percent rate that was in effect in 2007. An existing law that provides for potential year reductions starting in 2023 — if general funds outplace inflation by a minimum amount — would stay intact.

A final vote was not taken, an indication that the proposal may not yet have had enough support to pass the House and go to the GOP-led Senate. The House could vote as early as Wednesday, however.

Snyder issued a statement Tuesday night saying he appreciates that House leaders took seriously his concerns, "but I still have a billion dollars' worth of concerns because there has been no plan presented as to how this will affect residents and their communities statewide.

"Half of a billion dollars will come due in 2019 and over one billion by 2022, years in which we have planned funding specifically to invest in modernizing our state's infrastructure," the statement said. "I'd like to see a public plan as to how this will be paid for before I can lend my support to the new proposal."