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Michigan Senate sends income tax cut to governor's desk

Mathieu Turle

A divided Michigan Senate approved bills that lower the state’s individual and corporate income taxes Thursday. The bills would drop the tax rates to 3.9%.

Besides lowering the individual income tax rate, SB 768 would also create a $500 child tax credit and open more tax exemptions for people older than 62.

State Senator Aric Nesbitt (R-Lawton) said his plan gives blanket tax breaks instead of the targeted breaks the governor proposed.

“When you provide tax relief, it’s best to provide tax relief to all working families, all seniors, instead of trying to pick winners and losers,” he said.

But critics are raising alarms over the tax cut’s estimated multi-billion-dollar price tag.

State Sen. Curtis Hertel (D-East Lansing) said the Republican proposal would require the state to cut too much spending.

“It’s fiscally irresponsible to do it that way. We have to work together to determine what we’re going to fund, what we’re going to cut, and what we can give back to people,” Hertel said.

SB 768 is a compromise between the state House and Senate. An original version of the bill passed by the Senate had looped in the tax cut for corporations before the House stripped it and set it back.

Thursday’s vote means SB 768 now goes to the governor. SB 392, which deals with cutting corporate taxes, now goes to the state House.

All of this is against the backdrop of negotiations for the state’s next budget.

MIRS News reported Governor Gretchen Whitmer sent a letter to legislative leaders Thursday criticizing the tax cut bills. In the letter, Whitmer defended her own tax cut proposals while seeming to indicate she won’t sign the Republican-backed plan.

"This bill is fiscally irresponsible, unsustainable, and could increase costs for Michigan families at a time when they can least afford it," Whitmer wrote.

The governor said she's hoping to find common ground with Republican leaders.

"While I will not support legislation that forces cuts to schools, road repairs, and public safety, I am encouraged that the House and Senate agree in principle that putting money back in the pockets of Michigan’s retirees and working families is a priority,” she said.

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