by Scott McClallen
The Michigan Legislature late Thursday approved about $1 billion in tax changes highlighted in Gov. Gretchen Whitmer’s State of the State address.
The two changes include boosting the earned income tax credit and repealing the retirement tax.
Senators voted 27-11 to expand the state’s earned income tax credit, which would give about $442 million a year in refunds on tax bills.
Whitmer’s office says boosting the EITC from 6% to the federal mark of 30%, which could provide at least $3,000 in refunds to 700,000 families. The measure aims to lower costs for families with low incomes.
“With inflation, every dollar saved makes a difference,” the governor said on Wednesday. “That’s why we’re moving fast.”
Republicans backed a separate plan that they said would treat all retirees the same.
“When the state is sitting on a $9 billion surplus, and inflation is running rampant, Democrats would rather limit tax relief to their political allies than help all Michiganders when they need it most. Senate Republicans offered a tax cut for all Michigan residents, and every single Democrat voted no,” Michigan Freedom Fund Executive Director Sarah Anderson said in a statement issued Thursday night. “Today Senate Democrats made it abundantly clear: everyday Michiganders are on their own.”
Rep. Ann Bollin, R-Brighton Twp, said the Democrat bill favors seniors with public pensions over those with private pensions, 401(k) plans, or other retirement accounts.
“When I say I want to repeal the retirement tax – I mean for everyone, not just those with public pensions,” Bollin said in a statement. “The majority of seniors in our community don’t have public pensions. They spent their lives working in the manufacturing and health care industries, or at one of the many small businesses that dot our community. Those retirees would not benefit from the plan pushed through today.”
The Senate voted 23-15 to change how the state taxes retirement income, aiming to exempt public pensions and drop state revenues by about $500 million annually. Whitmer’s office says the change would save 500,000 households $1,000 a year.
“The time is now to provide our seniors with the extra money that they need,” Sen. Kevin Hertel, D-St. Clair Shores, said. “The time is now to restore the promise that we have made to seniors across this state.”
Hertel said the bill would take effect in 2023. Before an amendment, it wouldn’t have taken full effect until the 2026-27 tax year.
The two measures aim to repeal changes made by former Republican Gov. Rick Snyder. The bills must return to the House.
“Seniors who served, saved, and did everything right deserve to keep more of what they earned,” Whitmer said in her address.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
Photo “Gretchen Whitmer” by Gretchen Whitmer. Background Photo “Michigan Capitol” by Catherine Ottarson. CC BY-SA 4.0.