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$4,800 tax exemption, new senior exemption clears House

January 31, 2018

Article courtesy MIRS News

A proposal to raise the $4,000 personal exemption on Michigan’s personal income tax forms to $4,800 by 2020 passed the House Thursday 105-1, setting up a showdown with the Senate that wants an eventual increase to $5,000 and the Governor’s office, which wants to set the bar at $4,500.

The House plan also includes a new refundable $100 income tax credit for those age 62 and older. Thursday’s passage came the same day MIRS learned that Gov. Rick Snyder wants to use $175 million of the $280 million in unallocated lapse money from last year for the roads, which may create a point of difference between Snyder and lawmakers on the subject. 

The sponsors of the three bills — Rep. Roger Hauck (R-Union Twp.), Rep. Jeff Noble (R-Plymouth) and Rep. Jim Tedder (R-Clarkston) — each took a turn on the House floor to trumpet their respective bills. 

“Michigan’s tax spenders — the special interests who like to grab other people’s hard-earned money — aren’t happy about this proposal,” Hauck said. “But that’s not surprising. They are never going to feel like they have enough of our tax dollars to spend. They will never think the time is right for tax relief. But the time is right, and the time is now.” 

Tedder, the chair of the House Tax Policy Committee, said he would be taking a look at the Senate income tax exemption bills — SB 0748, SB 0749 and SB 0750 — in committee in the coming week.

“I hope together we can come up with a fiscally responsible way to provide relief for Michigan taxpayers,” he said. 

HB 5420 and HB 5421 passed 105-1 after Rep. Tim Greimel (D-Auburn Hills) attempted to increase the size of the exemption to $6,000 or the Senate-passed $5,000. He argued the tax cut “doesn’t go far enough” and if the chamber were “serious about tax relief” it would adopt his plan. However, the motion died by a gavel vote. 

“This is a step in the right direction, but we have a lot further to go,” he said, claiming the tax cut would equal “less than $13 a year for each member of a household.” 

HB 5422 passed 100-6 with Rep. Tom Albert (R-Lowell), Rep. Frank Liberati (D-Lincoln Park), Rep. Jim Lower (R-Cedar Lake), Rep. Steve Johnson (R-Wayland Twp.), Rep. Martin Howrylak (R-Troy) and Rep. Rose Mary Robinson (D-Detroit) voting no. Johnson and Lower voiced concern in committee about giving a special tax cut to individuals based on their age. 

Casting a yes vote was Rep. Sherry Gay-Dagnogo (D-Detroit) who said she didn’t oppose a tax cut for working families, but was agitated that state government needs to pass legislation to address in inadvertent error in President Donald Trump’s tax cut bill that could have erased the personal exemption on state income tax forms. 

“Tell the President that I’m not his cleanup woman,” she said. 

The House Fiscal Agency estimated the entire package will reduce state revenues by $245 million in this fiscal year and $372.5 million by FY 2020. Of those totals, $200 million is the cost of the $100 exemption. 

The state is set to put $150 million in General Fund money into the roads in FY 2019. Snyder wants to add the lapsed money to that for a total of $325 million, which is what the General Fund is scheduled to contribute to roads in FY 2020. 

Robinson was the only no vote on HB 4520 and HB 4521. Reps. Larry Inman (R-Traverse City), Joe Graves (R-Linden) and LaTanya Garrett (D-Detroit) were absent from session.

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