A Michigan lawmaker has introduced a bill that would reduce the state’s personal and corporate income tax rates to stimulate economic recovery.
Under S.B. 768, introduced December 2 by Sen. Aric Nesbitt (R), rates for the 4.25 percent personal income tax and the 6 percent corporate income tax would be reduced to 3.9 percent for tax years beginning on or after January 1, 2022. The bill would also provide families with a $500 nonrefundable tax credit for each dependent who is 18 years of age or younger.
The tax relief would help taxpayers recover from “historic inflation and high energy costs” and the economic hardship caused by the COVID-19 pandemic, Nesbitt said in a release. “Reducing these tax burdens will supercharge our economic bounce back, help families, and attract more investment and job providers to Michigan, where the business tax rate will be among the lowest in the Midwest,” he said. “Families and businesses are able to spend their hard-earned dollars far better than government.”
The bill was referred to the Senate Finance Committee. Nesbitt’s office did not respond to a request for comment by press time.
The Mackinac Center for Public Policy similarly called for a personal income tax rate reduction to 3.9 percent on August 19, citing the state’s lack of a full economic recovery following the coronavirus pandemic.
Michigan’s personal income tax rate was scheduled to be reduced to 3.9 percent in 2015, but the rate was frozen at 4.25 percent as of January 1, 2013, under legislation (H.B. 4631 and H.B. 4632) enacted in 2011 by then-Gov. Rick Snyder.
The 2011 legislation also repealed the Michigan business tax and imposed a 6 percent corporate income tax, the cost of which was partially offset by preventing the individual income tax rate from lowering to 3.9 percent.
Legislation proposed in 2015 (H.B. 4849)and in 2017 (H.B. 4001) would have implemented a personal income tax rate of 3.9 percent, but the bills were not successful. And in 2018 gubernatorial candidate Bill Schuette (R) — attempting to beat the eventual winner of the open seat, Gov. Gretchen Whitmer (D) — campaigned on lowering the personal income tax rate to 3.9 percent.