Michigan Gov. Rick Snyder is content with a 4.25 percent state income tax rate, and the Legislature lacks the votes for even a small tax cut. But 2018 will be Snyder’s last year in office, and every seat in the state House and Senate will be on the ballot. Whether taxpayers get any relief, then, appears to be in the hands of voters in next year’s primary and general elections.
A modest state income tax cut should be popular. After all, state government can afford to take less, and tax relief was promised to voters by a previous class of Lansing politicians.
In 2007 then-Gov. Jennifer Granholm raised the income tax from 3.9 percent to 4.35 percent with a majority of votes in the Republican-controlled Senate and Democratic-controlled House. Included in the law authorizing the tax hike was a scheduled rollback to the previous 3.9 percent rate.
But in 2011, Granholm and the Legislature repealed that provision, delivering instead a tax cut of a mere one-tenth of one percent, taking the rate to the current 4.25 percent.
Since then, a better economy and an array of reforms have meant a steady increase in the amount of money rolling into the state treasury. Economic growth means Michigan taxpayers are sending $6.9 billion more to Lansing than they did in 2010. That 27.3 percent increase is double the rate of inflation.
Michigan can afford an income tax cut.
A rate reduction might not even cost state government a dime, considering the projected increases in state revenue, which is expected to be $2.1 billion higher four years from now, a 9.3 percent increase. Using just half that increase would be enough to bring the income tax rate back down to 3.9 percent.
Pro-growth policies and a better economy are also pulling some people out of poverty. Fewer people are receiving government assistance, with the state’s welfare population down 75 percent in the past five years. Fewer people need food stamps, day care subsidies and related programs.
Nevertheless, Lansing politicians keep finding new ways to spend. Handouts and tax breaks for some favored corporations and developers will redistribute $884 million from Michigan taxpayers this year. There is no evidence this benefits the state, while history shows that an across-the-board cut in the income tax almost surely would stimulate growth.
Michigan families and small businesses deserve to keep more of their hard-earned income rather than keep handing it over to an already well-fed state government. Whether they get to keep more may be up to voters in 2018 when they send their messages to legislators in the August primaries and the November general election.
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