Michigan Senate approves $2.5B tax cut; Whitmer to veto

The GOP-dominated Senate approved $2.5 billion in tax breaks and sent it to Gov. Gretchen Whitmer, who will likely veto the measure.

The bill aims to provide tax relief from 40-year high inflation by dropping the personal tax rate from 4.25% to 3.9%, boosting retirement exemptions, and providing a $500 per child tax credit for those under 19.

Senate Majority Leader Mike Shirkey, R-Clarklake, called the threatened veto “a slap in the face” to Michiganders struggling to afford groceries as inflation bites into their budget and gas rapidly approaches $4 per gallon.

“A sure sign someone has been in government too long is if they’re trying to convince you the bureaucracy can’t afford a $2.5 billion tax cut when it has an $8 billion surplus,” Shirkey said.

“If she does veto this bill, the governor will be making it clear that she thinks she knows how to spend Michigander’s money better than they do,” Shirkey said.

The legislation would boost seniors’ tax deduction up to $40,000 for individuals and $80,000 for couples and lower the eligibility age from 67 to 62.

If enacted into law by April 1, 2022, The Senate Fiscal Agency estimated the bill would drop state revenue by $2.87 billion in fiscal year 2022-23, $2.52 billion in fiscal year 2023-24, and from there, the revenue loss would grow along with the economy.

Whitmer has said the tax cut would be unsustainable for her proposed $74 billion budget and would require budget cuts in the future.

However, Tori Sachs, director of the conservative Michigan Freedom Fund, said Whitmer’s priorities don’t represent taxpayers.

“Whitmer gave a single corporation $1 billion, bought the silence of her former department heads with taxpayer dollars, proposed Oprah-style giveaways to distract from her failed record, and now has the gall to tell families struggling to pay for gas that the state can’t afford to lower their taxes,” Sachs said in a statement. “It’s time for Whitmer to put taxpayers ahead of her special interests, put away her veto pen, and provide Michigan families with necessary relief.”

James Hohman, director of fiscal policy at the Mackinac Center for Public Policy, cited Michigan’s recent strong revenue growth as another reason to cut taxes.

“Unfortunately, Gov. Whitmer has indicated that she is likely to veto these bills once they reach her desk,” Hohman said in a statement. “The governor claims the tax cuts are not sustainable, yet she is proposing a budget that is 25% higher than it was before the pandemic.”

This article was originally posted on Michigan Senate approves $2.5B tax cut; Whitmer to veto