Tuesday’s agreement would cut taxes by an average of $ 2.5 billion a year, Republican House Spokesman Gideon D’Assandra said. The agreement is a compromise between the Senate and Republicans of the House of Representatives, who proposed competing proposals.

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The deal may face a veto from Democratic Gov. Whitmer, who has proposed a more modest $ 757 million tax cut, to abolish the three-tier pension tax and increase the income tax credit for low-income workers.

A Republican-backed plan that retains much of it Proposal to reduce the income tax of the republican republicwill be:

  • Reduce the personal income tax rate from 4.25 percent to 3.9 percent. This means that an employee who earns $ 70,000 would save $ 228 a year on paying state income tax.
  • Allow seniors aged 62 and over to deduct up to $ 40,000 annually from income tax or $ 80,000 for joint taxes. Currently, seniors aged 67 and older can deduct up to $ 20,000 individually or $ 40,000 for joint registrars per year.
  • Give $ 500 in tax credits to a child under 19. A family of four with a taxable income of $ 42,000 a year would save $ 1,147 a year under the plan, with $ 1,000 in tax credits and $ 147 in income tax.

The agreement cancels the GOP Senate’s proposal that corporate income tax rates be reduced from 6 percent to 3.9 percent. cost the state $ 465.5 million in fiscal 2023.

Overall, the Republican tax plan will cost $ 951 million this fiscal year, $ 3.1 billion in 2023 and $ 2.4 billion next year. fiscal agency of the House of Representatives.

The plan came at a time when the state budget has grown from $ 58 billion in 2019 to $ 63 billion in 2021 and $ 72 billion this year as a result of federal aid.

Republicans and supporters argue that the plan offers all Michigan residents much-needed tax breaks. They argue that Michigan revenue combined with potential budget cuts could offset the fiscal impact in the future.

“We can afford it,” said Steve Johnson, chairman of the House Oversight Committee, R-Wayland. “The people of Michigan are fighting now.”

Michigan ranked 23rd out of all 50 states tax burdenan indicator of the amount of tax payments as a percentage of the state’s gross domestic product, according to the study Tax Fundfiscal conservative think tank from Washington.

Michigan has about $ 7 billion in federal incentives and another $ 7 billion in surplus, but federal regulations prohibit states from using incentive money to fund tax cuts.

To comply with federal regulations, Michigan must find $ 2.5 billion in new revenue or budget cuts in fiscal 2023 and $ 1.8 billion in fiscal next year, according to an analysis by the House fiscal agency.

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