Gov. Rick Snyder and Lt. Gov. Brian Calley this afternoon not only called for the Legislature to restore the personal tax exemption believed to be lost in the federal tax reform, but to eventually increase it to $4,500, a $200 increase to the state personal exemption beyond what's already planned.
“We are putting Michigan families first, by working to enact a simple and fair solution to fix the unintended consequences of the federal tax plan,” Snyder said. “Everyone working together to limit income taxes on Michiganders is a great way to start 2018.”
If no action were taken at all, state Treasurer Nick Khouri and the Michigan Department of Treasury estimates the annual tax hit to a family of four in Michigan would be $680.
Khouri today renewed the call for the Legislature to ensure the preservation of the state personal exemption, after he and others have said the federal tax reforms signed into law by President Donald Trump would doing away with the tax write off.
The ability for taxpayers to claim exemptions on state taxes is dependent on federal exemptions, and with federal personal exemptions set to zero, that would essentially mean no personal exemption for Michigan taxpayers. Not everyone agrees with this analysis, however.
The state is estimating that would have the effect of a $1.5 billion tax hike on Michigan residents over a period of four years, or the $680 per year for the family of four.
Khouri has said keeping personal exemptions in Michigan should be a simple statutory fix.
But in addition, the administration also wants to push for an increase in the personal exemption amount to "fully offset" any other effects from the tax reform bill, Khouri said.
Khouri said the state exemption is already scheduled to go from $4,000 to $4,300 over the next three years. But the administration is now proposing that be pushed to $4,500 by 2021.
The push from $4,300 to $4,500 would be a $35 relief in taxes for a family of four, Khouri said.
Asked if the Snyder administration has any interest in keeping that $1.5 billion that would otherwise be state revenue, Khouri said the administration is focused on holding Michigan families harmless for the federal tax legislation.
Calley, who happens to be running for governor this year, tweeted out moments ago, "Restore the exemption and increase it to $4,500."
On Friday, Attorney General Bill Schutette, the GOP frontrunner said called on Michigan to "act decisively" and cut "state taxes immediately" in the face of the Trump tax cut.
"Avoiding a massive, unintentional tax increase is simply not good enough. Let's cut taxes now, as Republicans did at the federal level, by working to finally eliminate the Granholm income tax increase," said Schuette, a reference to the state income tax increase of 2007 from 3.9 to 4.35 percent. Snyder reduced that rate to 4.25 percent in 2011.
Source : MIRS News Service, January 8, 2017.
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