LANSING -- Update: May 25th, 1:25 p.m.
The Michigan AFL-CIO feels that Gov. Snyder's tax reform bill is unfair to seniors, middle class residents, and low income families. In written statement, Mark Gaffney, president of the organization, stated, "the signing of the Republican tax bill is a shameful wealth transfer from working people to CEOs. During times of stagnant unemployment levels, these irresponsible measures will increase costs to seniors and push working families further into poverty."
Do you agree with the AFL-CIO, or do you think Gov. Snyder's proposal will work and will create jobs?
Governor Rick Snyder has signed the tax bills into law.
Gov. Rick Snyder says the eight-bill package “brings greater fairness and simplicity to Michigan’s tax structure while aggressively positioning the state to be economically competitive.”
He says the new laws get rid of the Michigan Business Tax, simplify the tax code, level the playing field among taxpayers and protect low-income families.
“This is a defining moment in Michigan’s turnaround,” Snyder said in a press release. “The current tax system is riddled with inequities that are hostile to job growth. Eliminating these longstanding barriers will level the playing field for taxpayers, encourage entrepreneurship and spur more investment in Michigan. Working in conjunction with other reforms such as a balanced state budget and refocused economic development strategies, the overhaul of our tax structure lets job providers nationwide know that Michigan is the place to be. I appreciate the hard work of Lt. Gov. Brian Calley, our legislative partners and the support of stakeholders statewide to make this possible.”
Here’s what the plans entail, according to Gov. Snyder:
Under H.B. House Bills 4361:
§ The Michigan Business Tax is replaced by a 6 percent Corporate Income Tax. The corporate tax applies only to companies that file as “C” corporations – typically, those that issue stock – and means that nearly 100,000 businesses no longer have to file returns.
§ Numerous credits, deductions and exemptions are eliminated.
§ The income tax rate is frozen at 4.35 percent until Jan. 1, 2013, when it is lowered to 4.25 percent. The rate compares favorably with most Great Lakes states. Only Indiana’s flat rate of 3.4 percent is lower.
§ A three-tiered system determines whether retirement income is taxed. People born before 1946 will continue to receive the current retirement income exemptions, as well as the personal exemption, Social Security exemption and the exemption for dividends, interest and capital gains.
§ Taxpayers born between 1946 and 1952 will have a $20,000 single and $40,000 joint retirement income exemption in addition to the Social Security exemption and personal exemption until age 67. Upon turning 67, they receive a $20,000 single and $40,000 joint senior exemption against all income in addition to Social Security and personal exemptions.
§ People born after 1952 receive the personal exemption and Social Security exemption until they turn 67. When 67 and older they receive a $20,000 single and $40,000 joint senior exemption against all types of income. This exemption can be taken instead of the Social Security and personal exemptions if it is more beneficial to the filer.
§ For people born in 1946 and after, the retirement income and senior exemptions are phased out if total household resources exceed $75,000 for single filers and $150,000 for joint filers. People born before 1946 are not affected.
§ Military pensions continue to be exempt.
§ The Earned Income Tax Credit is retained at a rate of 6 percent of the federal credit.
Under H.B. 4362:
§ The Michigan Business Tax is repealed but firms wishing to take advantage of previously issued certificated credits may choose to continue paying the tax until their credits are exhausted. The most common certificated credits include brownfield redevelopment, historic preservation, battery, film and Michigan Economic Growth Authority credits.
Under H.B. 4479:
§ Businesses subject to the new Corporate Income Tax or the Michigan Business Tax no longer have the option of using the apportionment factor provided by the Multistate Tax Compact if they operate in other states. A loophole in current law allowed some firms to continue apportioning based on property, payroll and sales even after the Michigan Business Tax required all companies to apportion based only on sales.
Under H.B.s 4480 – 4484:
§ Public pensions are subject to state taxes as of Jan. 1, 2012.
The new laws take effect on January 1, 2012.
We want to hear your feedback on the laws. Leave your comments below.
