State legislation aims to reduce income tax this session

Posted at 6:51 AM, Jan 12, 2017
and last updated 2017-01-12 10:32:13-05

A lower income tax seems like a great idea to some, and it could be possible if legislation house Republicans plan to introduce Thursday passes.

"This is about providing much needed tax relief for the families, seniors, and hardworking taxpayers across our state," explains HB4001's sponsor, representative Lee Chatfield (R-Levering), "and allowing them to keep their hard earned dollars."

If passed, the bill will cut the income tax to 3.9%, and then drop it by one-tenth of a percent every year until it's eliminated.

Rep. Chatfield says with a budget surplus, now is the time to do it.

But critics of the legislation don't agree. Gilda Jacobs of the Michigan League for Public Policy says getting rid of the income tax will leave a devastating nine billion dollar hole in the state budget.

"We don't believe that this will be a very good idea for the state's fiscal health," laughs Jacobs.

House Republicans say Michigan will make up for the deficit through increased sales tax revenue as people spend the extra money they'd have without an income tax. Jacobs doesn't think the math works out.

She says "the income tax pays for something like 70% of the general fund, you have to find some way to replace some of those dollars."

That could mean an increased sales tax, or another hike in the gas tax, which isn't something some people are excited about.

"They're gonna find a way to get that money back," thinks Dominick Leepak.

Whether it's getting more money back in a paycheck, or spending less at the store, people like Leepak say they just want what's best for the state.