LANSING, Mich. — Sen. Ruth Johnson on Thursday voted against a Democratic plan that would unfairly tax Michigan seniors, stop an automatic state income tax rate cut from going into effect, and spend taxpayer money to help for-profit corporations.
“Under this plan, if you are a working senior making $40,000 a year to support yourself, you will pay state income taxes on $20,000 of that income,” said Ruth Johnson, R-Holly. “But if you are fortunate enough to have a $40,000 pension, you will pay no state income taxes — zero. That is just not fair.
“The bill also trades away long-term income tax relief for Michigan families, for a one-time refund that would amount to only $180 for a family of four with parents filing a joint return. It would also give $1.5 billion of taxpayer money to for-profit companies instead of using it to educate Michigan children or fix our troubled roads.”
Under a 2015 law, if revenues in Michigan’s general fund increase past a certain point, an automatic and permanent reduction to the state income tax rate is triggered. The House and Senate fiscal agencies estimate that Michigan was $700 million over the trigger’s threshold in fiscal year 2022, which would reduce the income tax rate from 4.25% to 4.05%.
House Bill 4001 would stop that cut by retroactively moving $800 million from the general fund to a new fund to provide one-time $180 rebates in 2023 and then directing nearly $1.5 billion over the next three years to the Strategic Outreach and Attraction Reserve (SOAR) Fund to subsidize development by private companies. It would also phase-in over four years an exemption on certain retirement income from the state income tax in a way that favors seniors with public retirement or pension benefits.