by Scott McClallen
The GOP-dominated Michigan Legislature approved $2.5 billion in far-ranging tax relief amid record 40-year-high inflation.
Meanwhile, Gov. Gretchen Whitmer and Democrats pitched sending immediately $500 checks to working families. Senate Majority Leader Mike Shirkey, R-Clarklake, characterized the plan as trying to “pay off” Michiganders for her COVID policies.
The GOP plan aims to provide a family of four $1,300 in annual savings via:
- A $500 per child tax credit for those under 19.
- Increasing the personal income tax deduction by $1,800.
- Raising the personal exemption for seniors 67 and older to $21,800 for individuals and $43,600 for couples and tying subsequent increases to the inflation rate.
- Lowering the state income tax from 4.25% to 4%.
- Restoring the Earned Income Tax Credit to 20%.
- Ensuring 100% disabled military veterans and the spouses of those killed in action receive a 100% property tax exemption and setting a $2,000 cap for veterans more than 50% disabled but less than 100% disabled while holding local governments harmless.
Shirkey claimed the plan was sustainable, a Whitmer concern.
“We are only beginning,” Shirkey said. “But I’m damn proud of what this body is about to pass. And we are not done yet.”
Lawmakers scrambled to pitch ways to spend taxpayer money after the Senate Fiscal Agency estimated Michigan’s budget surplus at $2.8 billion this current fiscal year and $1.1 billion next fiscal year.
However, Sen. Curtis Hertel, D-East Lansing, said the GOP plan, if enacted into law, wouldn’t provide immediate relief.
Senate Bill 784 aims to provide a tax credit to certain disabled veterans but it wouldn’t activate until December 31, 2022, and other plan provisions wait until the tax years 2022 and 2023.
“You refuse to actually help them,” Hertel said in a floor speech. “At the end of the day, this is just a promise. But here’s the thing: You can’t buy gas with a tax cut in the future. You can’t buy groceries with a tax cut in the future.”
Shirkey said higher prices mean more government tax revenue captured through sales taxes, at a time Michiganders need it the most.
“Government is the only winner when inflation and gas prices are at record highs,” Shirkey said. “The increasing costs of everyday necessities affects all of us, stretching family budgets thinner and thinner — especially for the working class and those less fortunate — while state government revenues soar higher and higher.”
House Speaker House Jason Wentworth, R-Farwell, welcomed the expanded property tax relief for disabled veterans and their families, a bill tie-barred with the tax relief plan.
“State government is sitting on billions of dollars in extra revenue, while hard-working families are struggling to pay their bills and buy groceries. That shouldn’t happen,” Wentworth said. “Our family relief plan will finally let everyone keep more of their own paychecks and get ahead of rising inflation and the pain at the pump.”
If history is any indicator, Whitmer will veto the plan. She vetoed a similar $2.5 billion tax break in March and rejected a plan to slash gas taxes temporarily.
“It isn’t the Legislature’s money or the governor’s money to spend; it’s the people’s money and they deserve to keep more of what they earn so they can better provide for their families,” Shirkey said. “I hope this time the governor agrees to prioritize the people of Michigan and resist the urge to spend it on growing state government.”
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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 Cjh1452000. CC BY-SA 4.0. Background Photo “Michigan State Capitol” by Corey Seeman. CC BY-NC-SA 2.0.
