Why do legislators want to cut the state income tax?

On the coattails of President Donald Trump’s win in Michigan last November, Republicans increased their majority in the Michigan House of Representatives. The GOP holds a 63-46 majority over Democrats. House GOP leadership began the new year by proposing to wipe out the state income tax over 40 years – eliminating a $9 billion revenue source.

“A strong economy begins in our homes,” tax cut bill sponsor Lee Chatfield, R-Levering, declared. “When Michigan families have more of their own incomes to spend or save, the entire state economy benefits. This simply is the right thing to do and the right time to do it.”

Chatfield had the support of House Speaker Tom Leonard, R-Dewitt. Leonard greeted Gov. Snyder’s February state budget proposal (which did not include an income tax cut) with calls for a tax cut: “It is well past time to give the people of Michigan the tax relief they deserve.”

Despite those tax-cutting pleas, House leadership failed to garner the votes to seal the deal. The full income tax elimination bill passed a House committee but didn’t make it to the floor for full passage. And the full House defeated a trimmed-down, $1.1 billion income tax cut in late February, with a dozen House Republicans declaring the tax cut fiscally irresponsible. They argued it didn’t provide significant savings to taxpayers and would cause damaging reductions in public services, like road repairs, universities, prisons and the state’s rainy day fund.

In response, GOP leaders in both the House and Senate turned to another priority – they passed $542 million in budget cuts last week aimed at eventually reducing the state’s teacher pension system. But the ultimate conservative goal of income tax cuts remains.

“It’s the people’s money,” Representative Thomas Albert, R-Lowell, and chairman of the House Financial Liability Reform Committee, said at an April fiscal summit hosted by Business Leaders for Michigan in explaining why he and colleagues would continue the tax cut fight.

Last week, as budget negotiations continued, a spokesperson for House Speaker Leonard told Bridge: “We would rather have Michigan’s hard-working taxpayers keep the money they’ve earned, instead of a government agency.”

The push for more tax cuts is nearly perpetual in Lansing – and it’s a bipartisan instinct. During House floor debate on the income tax cut bills, Democrats announced that they, too, wanted to cut taxes on low- and middle-class families but criticized what they called Republicans' efforts to give more tax breaks to the rich.

NEXT: What might YOU get out of an income tax cut?

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Tue, 05/09/2017 - 4:06pm

Just more grandstanding cliche statement nonsense from politicians.

Steve H.
Tue, 05/09/2017 - 4:55pm

Call me dense if you wish, but Michigan can't afford to cut income taxes. With the need to fund everything that the state must accomplish (roads is a biggie), cutting taxes would clearly be biting off our nose to spite our face. Cutting taxes (aka trickle down economics) doesn't work. The same GOP that voted to start taxing my pension right after I retired (surprise), is now the group that wants to get rid of taxes. They justified taxing my pension to make up for the breaks given to their business overlords. Now they want to further decimate the state budget? Seems like wishful thinking to me. It also seems rather idiotic.

David Waymire
Tue, 05/09/2017 - 6:03pm

From a poll this spring I commissioned on behalf of a client:

Which of the following two statements comes closer to your view? [ROTATE TWO
PARAGRAPHS BELOW]
1. The most important thing state government can do to provide more and better jobs and a higher quality
of life for Michigan families is provide a quality education, good roads and transportation, quality public services like safety, water, fire protection, parks and libraries that create an environment in which people want to live, work and run a business.
2. The most important thing state government can do to create more and better jobs and improve the quality of life in Michigan is to cut taxes for individuals and business. That’s what really creates more and better jobs and will make our state a better place to live and work.
67% Statement 1 – provide a quality education, good roads & transportation, & quality public services
30% Statement 2 – cut taxes for individuals and business
3% Undecided/Refused

This is about ideologues undeterred by a majority view and data that shows cutting taxes at this time in Michigan is both bad politics and bad policy.