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The Republican-led Legislature and Democratic Gov. Gretchen Whitmer appear headed for an intense standoff over the upcoming fiscal year budget. The end goal should be ensuring Michiganians are treated fairly while setting up the state for a stable future.
Whitmer and lawmakers clearly have differing ideas of what that looks like.
Just a week after the governor presented her $74 billion budget proposal, the Michigan Senate has passed a $2.5 billion tax cut plan. Whitmer has already said the tax cut is unsustainable, but that's how many Republicans are dubbing her spending plan, which grants tax relief and benefits to only select groups of state residents.
The state for 2023 has a $7 billion tax revenue surplus, plus $4.7 billion in discretionary spending of federal COVID funds.
The tax cut proposal is certainly worthy of discussion, and would offer relief to a much broader array of citizens and corporations as they seek to recover from the pandemic's impact on the economy.
The bill, sponsored by Sen. Aric Nesbitt, R-Lawton, would reduce the individual income tax rate to 3.9% from 4.25%, and the corporate income tax rate to 3.9% from 6%. That would put Michigan's corporate tax rate among the lowest in the Midwest.
It would also allow taxpayers to claim a tax credit of $500 for each dependent child, and some additional deductions were added for senior citizens by increasing the tax exemption for all retirement income to $30,000 for individuals and $60,000 for couples.
Democrats are criticizing the tax cuts and the hit they'd make to state coffers.
Yet supporters say this is short-sighted, as the lower rates could attract more investment and population to the state -- something Michigan certainly needs. It could also keep retirees home instead of switching their residency to zero-tax states such as Florida.
If the overall tax burden on businesses were lower, then the state may not need to pass hurried, targeted economic incentives as the Legislature recently did to lure the $7 billion investment from General Motors for its expanded electric vehicle and battery production.
"Reducing these tax burdens will supercharge our economic bounce back, help families and attract more job providers and economic growth to Michigan -- leaving more resources with families and small businesses, expanding freedom and encouraging hard work and investment, which are the cornerstones of a healthy economy," Nesbitt said in a statement.
It's a more fair approach than Whitmer's, which as we've pointed out before includes restoring the tax-free status of public employee pensions, "hero pay" for certain first responders and essential workers, and a state subsidy for electric-vehicle purchases.
Leadership in the state House has previously signaled it is inclined to reduce the tax burden and use the state's surplus to pay down long-term debts such as public pensions and retiree health care.
These are the right priorities that would pay off for all Michiganians, both now and into the future.
-- Detroit News