Michigan just passed a bill to lower taxes—but it’s far more generous to corporations than individuals. Here’s what happens next.
Need to Know
- The Republican-controlled Michigan Senate just passed a massive tax reduction for corporations.
- Democrats have pushed instead for tax breaks for working individuals, but that proposal was shut down.
- The corporate tax cut could be part of what Republicans want to repeal retirement taxes they introduced.
LANSING—Responding to the governor’s calls to lower taxes for retirees and working families, Republicans in Michigan signaled how they believe a record state surplus should be spent—aiming massive tax breaks toward corporations and tailoring comparatively smaller ones at individuals.
On Tuesday, Republicans in the state Senate pushed through a bill that would slice corporate income taxes by a third, while shaving individual income taxes by a far thinner margin. Democrats assented to individual income tax relief, but the minority party failed in attempts to block corporate cuts.
“When I think about who needs the biggest break right now, I think of the exhausted teachers, childcare providers, grocery store clerks, and delivery drivers,” Democratic Sen. Jim Ananich, the Senate Minority Leader from Flint, said.
“How kind of the Republicans to offer them the equivalent of 50 cents a day,” Ananich sarcastically stated.
The bill would reduce state revenue by billions each year, specifically hacking away at the school aid fund budget and by extension reducing social spending all around.
Republicans claim the bill will help fight inflation and improve the job market.
BREAKING DOWN: 7 Projects to Get Excited About in Gov. Whitmer’s Proposed Budget for Michigan
Why Include Corporations?
In response to the Republican legislation, Ananich proposed to keep the tax cut for individuals but remove it for corporations.
All 16 Democrats voted in favor of tax reductions for only individuals, not corporations, but the 22 Republicans in the Senate voted to oppose it. The two parties switched sides to vote on the inclusion of corporate tax breaks, and the original bill passed 22-16 on the back of the Republican majority.
The bill also reduces tax payments for each child on a return.
The timing of the measure is significant. In Governor Gretchen Whitmer’s recently laid out budget, she proposed tax breaks for Michiganders that would lift working people out of poverty and scrap a pension tax that Republicans imposed in 2011.
Both measures, in recent years, have seen support from both parties, and reports indicate that Republicans are willing to negotiate over the issues.
But the party won’t do so without receiving some concessions of its own—possibly, the corporate tax break. Whether or not Whitmer is open to lowering taxes for corporations could decide whether her priorities see the light of day.
“I look forward to working with the legislature over the next few months to ensure we get a budget into place by the June 30 deadline that makes the most out of this opportunity,” state budget director Christopher Harkins said.
VOTING: Pre-Paid Postage and 9 Days of Early Voting? Michigan Will Soon Decide New Voting Norms