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Michigan debates tax cuts in 2014 legislative session

Tax revenue in Michigan exceeded projections by $429 million for 2013, according to the state Department of Treasury. The agency predicts that there will be new revenue of $971 million through 2015.

This unexpected tax income has led to a debate regarding how best to spend the money obtained and whether tax cuts or other tax relief should be on the table for 2014 and subsequent years. Michigan Budget Director John Nixon told MLive that "a tax cut or tax relief is inevitable, and it makes sense." However, what form that tax cut will take, if it does happen, is still unclear. In 2011, Governor Rick Snyder signed into law a revision of Michigan's taxation of businesses in the state, creating the Corporate Income Tax. This dropped business tax revenue by 47 percent; despite this, overall tax income for the state grew. Many analysts predict this was a one-time increase caused by various factors, including an improving economy and a rush of investors cashing in on capital gains amid fears of potential national tax reform.

In addition, the state anticipated business would claim nearly half a billion dollars in Michigan Business Tax rebates in 2013. Businesses instead only claimed $75 million in such rebates. However, business will have the option of filing to claim those rebates for the next several years, so it is possible that much of the windfall will still ultimately go back to Michigan's businesses.

Potential tax law changes ahead?

Among the tax changes the legislature is currently considering is a property tax cut across the state. Michigan has already increased its property tax exemption amount for certain businesses in distressed areas. One potential area could be property tax cuts, exemptions and rebates for personal and business property in the state. Other changes could include lowered income tax rates for certain individuals, or a one-time tax rebate that would benefit Michigan residents without affecting future tax revenue. Other lawmakers are seeking to increase investments in the state's infrastructure, including its schools and roads.

Speaker of the House Jase Bolger told the Detroit Free Press that there was no solid proposal regarding tax cuts, but that whatever form the tax cut would take would "provid[e] relief for working families." Governor Snyder has also advised caution on tax cuts, indicating he would support a change in the state's tax code if it was "fiscally responsible."

The Michigan Tax Code is a fluid law

Keeping abreast of Michigan's tax law is no easy task. Continued reform and tax law changes seem likely as Michigan legislators debate how best to maximize an improving economy in the state.

Businesses and individuals seeking property tax law advice should contact an experienced tax law attorney to discuss their situation.

 

 


 
 
     

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  Hoffert & Associates

Located in Farmington Hills, Hoffert & Associates, P.C., represents clients throughout Michigan, in cities including: Traverse City, Grand Rapids,

Lansing, Ann Arbor, Detroit, Kalamazoo, Portage, Dearborn, Troy, Warren, West Bloomfield, Novi, Birmingham, Northfield, Brighton, Jackson, Battle Creek,

Flint and Saginaw. Our firm also represents clients in Oakland County, Wayne County, Macomb County,

Washtenaw County, Livingston County and Grand Traverse County.