Appeals Court: Michigan income tax cut is event-driven, not permanent

The Michigan Court of Appeals ruled Thursday that the 2023 tax cut owing to a 2015 law was event-driven and one-time, not permanent. A Mackinac Center appeal is likely.

The Mackinac Center had filed a lawsuit on the matter after State Treasurer Rachael Eubanks pursued tax collections assuming an income tax rate of 4.25%, the 2022 rate, and not the 4.05% rate from 2023. The difference amounts to roughly $714 million.

The 2023 rate was lowered because the state budget met conditions that triggered a tax cut, as set out in a 2015 law. Gov. Gretchen Whitmer tried budgetary gimmicks to avoid the tax cut trigger, including a $180 rebate for each taxpayer. When that failed, Eubanks, a member of Whitmer’s cabinet, sought an official opinion from Attorney General Dana Nessel.

In Michigan, attorney general opinions can be used by departments, such as the state treasury, to set policy. When Nessel issued her opinion, Eubanks set the 2024 tax rate at 4.25%.

The Mackinac Center sued. It was joined by two current lawmakers who approved the 2015 law, Sen. Ed McBroom, R-Waucedah Township, and Dale Zorn, R-Onsted.

“The question in this case has always been what is the clearest reading of the statute,” said Patrick Wright, vice president for legal affairs at the Mackinac Center. “We remain convinced that the best reading of the law requires a permanent tax cut.”

Read the decision for yourself