Governor Gretchen Whitmer signed a bill Tuesday to restore a tax break on retirement income and to boost the state earned income tax credit — the biggest state tax overhaul in a dozen years.
“It is done. It’s in effect,” Whitmer announced to the applause of Democrats and advocacy groups that had long lobbied to reverse a lot of what then-Governor Rick Snyder and a Republican Legislature adopted to clear the way for a business tax cut.
“You know, it’s a new day in Lansing and I’m excited to sign a $1 billion tax cut for seniors and for working families,” she said. “Seniors had money that was promised to them that was taken out of their hands. Working families who were a missed paycheck away from poverty had a lifeline pulled away. It was wrong then and today we are making it right.”
Whitmer said the new EITC will benefit half the children in Michigan with an average refund of $3,150 to 700,000 families.
Whitmer had hoped to include sending out $180 tax rebate checks to all households, but that was blocked by Republicans who refused to put up votes for a procedural “immediate effect” motion that required a two-thirds super-majority. Republicans say Democrats were trying to use one-time rebates as a ploy to block a permanent decrease in the state income tax rate. That would be triggered by an increase in state revenue.
“I don’t know why the governor continues to fight it at every point trying to stop an income tax cut for working families,” Senate Republican Leader Aric Nesbitt (R-Lawton) said. “We’ll continue to win on this. I think it’s pretty telling that they continue to want to use shell games to try and stop it because they know the law is the law.”
But Whitmer said revenue projections are still not finalized and there’s no guarantee an income tax rate cut is on the way. That could also block the new EITC from taking effect in time to be used during this tax season. There is a separate bill that could serve as a vehicle to end that standoff.
MPRN’s Colin Jackson contributed to this report.
