LANSING, Mich. — Sen. Joseph Bellino on Thursday voted against a Democrat scheme to stop an automatic state income tax rate cut from going into effect.
“It’s shameful. The Democrats’ plan takes away a lifetime of lower taxes for everyone in exchange for a one-time rebate too small to even cover a single week of groceries for a family of four,” said Bellino, R-Monroe. “The governor and Senate Democrats talked a lot about helping folks, but it was all a shell game to hide their real goal of stopping tax relief for all Michigan taxpayers.”
Under a 2015 law, if revenues in Michigan’s general fund increase past a certain point, an automatic and permanent reduction to the state income tax rate is triggered. The House and Senate fiscal agencies estimate that Michigan was $700 million over the trigger’s threshold in fiscal year 2022, which would reduce the income tax rate from 4.25% to 4.05%.
House Bill 4001 would stop that cut by retroactively moving $800 million from the general fund to a new fund to provide one-time $180 rebates in 2023 and then directing over $1.4 billion over the next three years to the Strategic Outreach and Attraction Reserve (SOAR) Fund. It would also increase the state’s Earned Income Tax Credit (EITC) from 6% to 30% of the federal EITC beginning with the 2022 tax year and phase-in over four years an exemption on certain retirement income from the state income tax, such as public retirement or pension benefits.
“While I support increasing the EITC and ending the retirement tax, I cannot support these measures at the expense of providing much-needed relief to everyone in our state,” Bellino said. “Also, I believe all seniors need relief now and this bill doesn’t apply to all our seniors and doesn’t give the full relief immediately.”