Commentary
Michigan’s income tax cut was 16 years in the making
Both parties fail to bring back Michigan’s pre-2008 tax rates
In 2007, Gov. Jennifer Granholm described a tax hike as “temporary.” More than 15 years later, tax rates are still above 2007 levels. (Archive)
In 2007, Gov. Jennifer Granholm and the Michigan Legislature passed what they called a temporary income tax hike, upping rates from from 3.9% to 4.35%.
The tax rate would be rolled back once the state was out of its economic crunch, Granholm said, as Michigan was in the midst of a one-state recession.
More than 15 years later, coming into 2023, Michigan’s tax rate was 4.25%, closer to the “temporary” Granholm rate than to what preceded it. Though the rate had rolled back slightly in the years since, it was still far above that 2007 rate.
Although Granholm initiated the increase, Gov. Rick Snyder then failed to deliver on the promise of bringing the income tax rate back down to 3.9%. Snyder did deliver another reform, however: a 2015 law requiring the income tax rate to be reduced when general fund revenue for the preceding fiscal year exceeds the inflation rate.
This happened in 2022, triggering the law. The income tax rate was rolled back in 2023 from 4.25% to 4.05%. This is still substantially higher than it was before Granholm’s emergency tax hike.
Gov. Gretchen Whitmer resisted the move, however. Using a variety of spending tricks involving the budgets from 2023 and 2022, as well as floating a proposal to send out $180 checks to Michigan residents, Whitmer and her Democratic allies attempted to reduce apparent revenue and thus keep the promised tax cut from being triggered.
When that attempt failed, Whitmer argued that the tax cut would apply for one year only. Under this interpretation — which is disputed by the lawmakers who created 2015 law and does not appear to be supported by any language in the legislation — the intent of the law was that the trigger conditions must met every year before the tax rate can be reduced for that year. Attorney General Dana Nessel agreed with that interpretation in an opinion provided to the Michigan Treasury.
This is a good time to get your lawmaker on record: Does your person in Lansing support a permanent tax cut, or the event-driven tax cut as interpreted by Nessel? Tell friends, neighbors and relatives how far Lansing has gone to deny tax relief. Tell them where your local rep stands.
If you don’t know who represents you in Lansing, find your state representative here and your state senator here.
Jamie A. Hope is assistant managing editor of Michigan Capitol Confidential. Email her at hope@mackinac.org.
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Michigan’s income tax cut was 16 years in the making
Both parties fail to bring back Michigan’s pre-2008 tax rates
In 2007, Gov. Jennifer Granholm and the Michigan Legislature passed what they called a temporary income tax hike, upping rates from from 3.9% to 4.35%.
The tax rate would be rolled back once the state was out of its economic crunch, Granholm said, as Michigan was in the midst of a one-state recession.
More than 15 years later, coming into 2023, Michigan’s tax rate was 4.25%, closer to the “temporary” Granholm rate than to what preceded it. Though the rate had rolled back slightly in the years since, it was still far above that 2007 rate.
Although Granholm initiated the increase, Gov. Rick Snyder then failed to deliver on the promise of bringing the income tax rate back down to 3.9%. Snyder did deliver another reform, however: a 2015 law requiring the income tax rate to be reduced when general fund revenue for the preceding fiscal year exceeds the inflation rate.
This happened in 2022, triggering the law. The income tax rate was rolled back in 2023 from 4.25% to 4.05%. This is still substantially higher than it was before Granholm’s emergency tax hike.
Gov. Gretchen Whitmer resisted the move, however. Using a variety of spending tricks involving the budgets from 2023 and 2022, as well as floating a proposal to send out $180 checks to Michigan residents, Whitmer and her Democratic allies attempted to reduce apparent revenue and thus keep the promised tax cut from being triggered.
When that attempt failed, Whitmer argued that the tax cut would apply for one year only. Under this interpretation — which is disputed by the lawmakers who created 2015 law and does not appear to be supported by any language in the legislation — the intent of the law was that the trigger conditions must met every year before the tax rate can be reduced for that year. Attorney General Dana Nessel agreed with that interpretation in an opinion provided to the Michigan Treasury.
This is a good time to get your lawmaker on record: Does your person in Lansing support a permanent tax cut, or the event-driven tax cut as interpreted by Nessel? Tell friends, neighbors and relatives how far Lansing has gone to deny tax relief. Tell them where your local rep stands.
If you don’t know who represents you in Lansing, find your state representative here and your state senator here.
Jamie A. Hope is assistant managing editor of Michigan Capitol Confidential. Email her at hope@mackinac.org.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.