Bill could reduce income tax, eliminate it

Posted at 7:25 AM, Feb 16, 2017
and last updated 2017-02-16 08:19:38-05

A bill that would reduce income tax passed its first step when it was approved by a house committee. Rep. Lee Chatfield (R) District 107 is the one who introduced it. He says the bill will put more money in the pockets of taxpayers.

"This is about allowing them to make ends meet,” Rep. Chatfield said. “And spending their money how they would like to see it spent. And I think this is the greatest way to grow our economy here in our state."

If the bill makes it through, it'll reduce the income tax rate from 4.25 percent down to 3.9 percent. Then every following year it'll go down by .1 percent until by 2057, Michigan won't even have an income tax. Pete Lund is for the bill. He says it'll bring more jobs to Michigan.

"People are looking at where they're gonna put their jobs,” Lund said. “One of the things they're gonna look at is what types of taxes they're paying."

Charles Owens agrees that the bill could create new jobs. He says small businesses would benefit from a reduced income tax by having more money to invest in themselves. However, eliminating the tax altogether wouldn't be in their best interest, because without income tax, the government might try to find other ways of bringing in that money.

"An increase in sales tax which has been discussed or increasing or creating new business taxes will occur,” Charles Owens said. “And they don't want that."

MSU economics professor Charles Ballard is against the bill. He says reducing the income tax would cripple Michigan's infrastructure.

"When townships and cities and villages are struggling because of the savage cuts to revenue sharing,” Professor Ballard said. “I just don't think this strikes the correct balance."

Gilda Jacobs agrees with Ballard. She says looking at states like Texas which don't have income tax should be proof that this bill won't bring Michigan more money.

“We can go and look at other states and what they've actually done and they've not had that economic boost,” Jacobs said. “There's virtually no proof"