LANSING, Mich. — State Sen. Roger Hauck on Thursday voted against legislation pushed by Gov. Gretchen Whitmer and legislative Democrats that would eliminate an automatic income tax rate reduction for Michigan workers.
“We had a unique opportunity to right a wrong for Michigan seniors and provide much-needed relief to those who work hard and send their tax dollars to Lansing,” said Hauck, R-Mt. Pleasant. “However, after the tricks and backroom changes, the plan ultimately presented to lawmakers did neither of these things, and instead piled numerous legislative efforts into a single spending bill that leaves countless taxpayers behind and only further complicates things for our seniors.”
Under a 2015 law, an automatic and permanent reduction to the state income tax rate is triggered if revenues in Michigan’s general fund increase past a certain point. The House and Senate fiscal agencies estimate that Michigan was $700 million over the trigger’s threshold in fiscal year 2022, which would reduce the income tax rate from 4.25% to 4.05%.
House Bill 4001 would stop that cut by retroactively moving $800 million from the general fund to a new fund to provide one-time $180 rebates in 2023 and then directing over $1.4 billion over the next three years to the Strategic Outreach and Attraction Reserve (SOAR) Fund. It would also increase the state’s Earned Income Tax Credit (EITC) from 6% to 30% of the federal EITC beginning with the 2022 tax year and phase-in over four years an exemption for public retirement or pension benefits from the state income tax.
Hauck said the one-time check amounted to roughly 50 cents per day and added that those with a 401(k) retirement system would still be taxed under a complicated, overly burdensome system, while those on a public pension would be fully exempt, only after a multi-year, complex phase-in process, however.
The senator insisted the Legislature could do better and instead supported efforts to ensure state law was followed and that the tax rate reduction took place for everyone. Hauck also supported an effort to finally right the wrong that Michigan retirees have lived under and lower taxes for every senior, regardless of how they earned their money. Each of these amendments were voted down by Senate Democrats.
“The legislation that was put before us took away a permanent, meaningful tax reduction and instead bribed people with a one-time rebate for allowing their pockets to be picked,” Hauck said. “I supported efforts to provide relief to all seniors, not just those with government pensions, and provide tax relief to all workers, not just a select few. Retirees certainly should not be punished by the government for how they earned a living and those who paid their share of taxes shouldn’t be left behind while a hand-selected few benefit from this plan.”