A Michigan lawmaker has introduced a bill that would decrease the corporate income tax rate and expand a deduction for deemed repatriated income.
S.B. 392, introduced April 27 by Senate Finance Committee member Jon Bumstead (R), would reduce the 6 percent income tax to 5.5 percent for tax year 2021 and to 4.9 percent for tax years beginning on or after January 1, 2022. The reduction would provide relief for small and medium-size businesses, according to an April 27 release.
The 6 percent rate was set by legislation signed in 2011 by then-Gov. Rick Snyder.
“This business tax reduction is not designed for those who didn’t ask for it or for those who don’t need it,” Bumstead said in the release. “It is a tax cut designed to help businesses on the main streets of our communities that are still struggling to keep their doors open.”
According to the release, the bill would also help keep Michigan’s business tax rate competitive with other states.
“Kentucky’s tax rate is currently 5 percent, and Indiana previously lowered their rate to 5.25 percent, and by July 1, 2021, their tax rate will decrease again to 4.9 percent,” the release stated.
S.B. 392 would also amend the state tax code to allow corporate taxpayers to deduct amounts received from deferred foreign income under IRC section 965. According to a 2019 Michigan Treasury document, deemed repatriated income under section 965 is “within the ambit of the foreign dividends received deduction in subsection 623(2)(d), even though IRC [section] 965 falls outside the range of sections 951 to 964 currently referenced in the statute.” The change in S.B. 392 would expand subsection 623(2)(d) of Michigan's corporate income tax statute to include section 965 income.
The measure is part of a larger effort, led by Senate Republicans, to deliver tax relief to businesses and families, according to the release.
Another bill — S.B. 393, introduced the same day by another Finance member, Sen. Kevin Daley (R) — would provide state credits as property tax relief for businesses that were forced to close for at least six weeks because of the COVID-19 pandemic and that experienced a certified loss in gross receipts revenue of 25 percent or more.
And S.B. 378, introduced April 21 by Finance Committee Chair Jim Runestad (R), would increase the qualified child credit for families. It would allow a taxpayer to claim a nonrefundable tax credit of up to $500 per qualified dependent — those under age 19 on the last day of the tax year — for tax years beginning on or after January 1, 2021, and ending on December 31, 2024.
“Providing tax relief for families and businesses is the most direct way we can help everyone who is still struggling due to the pandemic,” said Bumstead. “Fewer taxes means more competition, and greater competition will ultimately help increase the wages and benefits of workers across the state.”
All three bills have been referred to the Finance Committee.
Bumstead did not respond to a request for comment by press time.