By DAVID EGGERT – Associated Press
LANSING, Mich. (AP) — Gov. Gretchen Whitmer on Friday vetoed Republican proposals to permanently reduce the state income tax, make more seniors eligible for deductions and restore a child tax credit, saying it would reduce funding for basic state services.
The expected veto could spark negotiations between GOP lawmakers and the Democratic governor, who has called for more targeted tax breaks for retirees and low-wage earners.
The legislation “would defund children, police and communities and, according to impartial analysis, blast a recurring multi-billion dollar hole in basic government functions from public safety to potholes,” she wrote to lawmakers.
While Michigan has a budget surplus of $7 billion, her government says it’s mostly one-off revenue that can’t be expected for years to come.
The bill would have reduced personal income tax from 4.25% to 3.9%, lowered the age for taxpayers from 67 to $20,000 individually or $40,000 collectively to 62, allowed an additional exemption for retirement income not covered by the standard senior withholding are covered and a $500 per child tax credit is created. That would have saved taxpayers $2.5 billion annually.
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Republicans accused Whitmer, who is up for re-election, of missing an opportunity to help residents struggling with high inflation.
“This plan would have reduced taxes for every single taxpayer in the state and provided bonus assistance to seniors and families with children. It has done everything the governor promised it to do,” said House Speaker Jason Wentworth. “But at the end of the day, she just couldn’t bring herself to give that money back to the taxpayers who deserve it.”
Whitmer has proposed restoring Michigan’s earned income tax credit from 6% to 20% of the federal credit and phasing out a 2011 amendment that reduced a retirement income exemption for those born after 1945.
She said those who qualify for the earned income tax credit would receive an additional $300, while retirees would save more than $1,000 under the plan, which will increase revenue by about $750 million through tax year 2025 -dollars would decrease annually.
Democrats had criticized the proposed income tax cut and questioned the potential to jeopardize billions in federal pandemic aid. Noting that Michigan doesn’t have a graduated income tax, they said people in the bottom 20% of income (less than $23,000) would save an average of $12, while those in the top 1% (at least $539,000) would save $4,901 would.
In her veto letter, Whitmer cited opposition from groups representing education, public safety and mayors.
Republicans had said it was important to give tax breaks to all residents, saying the average family of four would save $1,200.
Also on Friday, the governor promised to veto a bill that would suspend the state’s per-gallon gasoline tax for six months, instead proposing to freeze the sales tax on gas.
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