LANSING – Before leaving for the summer, the House overwhelmingly approved its plan to drop the state’s income tax rate to 3.9 percent by 2018. It was approved 97-13, with only a smattering of Democrats in opposition.

The bill (HB 5729 ) would phase in the cut from the current 4.35 percent rate, set to drop to 4.25 percent in January (although separate legislation would move that up to October 1). The initial cut is projected to cost $75.2 million, with general fund revenue dropping $798.7 million by fiscal year 2018-19 when the full cut is implemented.

“It is imperative for the future economic health of our state that we let taxpayers keep as much of their hard-earned money as possible,” House Speaker Jase Bolger (R-Marshall) said in a statement.

The bill sponsor, Rep. Nancy Jenkins (R-Clayton), said this will be economically beneficial and that taxpayer dollars must be used wisely or not at all.

“There is no excuse for state government to hold onto more money than it needs,” Ms. Jenkins said.

Rep. Vicki Barnett (D-Farmington Hills) said this was nothing but relentless election-year pandering and is why she opposed the bill. When she announced she would be voting no, several Republicans gave her a mock applause.

“I’m disappointed, disgusted, but I am not surprised,” Barnett said.

Most Democrats complained about the tax cut, but did not dare vote against it in an election year.

That was reminiscent of when the House Republican majority in 1999 passed a similar plan to reduce the then-4.4 percent income tax rate to 3.9 percent in increments of 0.1 percent a year through 2004. In subsequent years, as state revenues crashed as a result of the tanking economy and the rate cut, many Democrats at the time rued their votes.

The bill came after House Republicans introduced a package of bills aimed at speeding up the income tax rate drop and increasing the personal exemption. Both of those bills came from vulnerable Republican members in the November election. Jenkins’ seat is also considered in play this fall.

In a statement, former Sen. Jim Berryman, who is running in the August Democratic primary for the right to challenge Jenkins in November, said that while he supports tax relief for working families, he believes that Jenkins should explain how she would pay for the proposal.

“To put forth a tax plan that costs over $3 billion without telling the people of Lenawee how it’s paid for or what cuts will be made to offset the plan is not only fiscally irresponsible, it’s reckless,” Mr. Berryman said. “The people she represents deserve to know how much she would cut education, health care for the most vulnerable and police and fire protection to pay for it.”

Several House Democrats called for the immediate reduction to 3.9 percent, rather than wait until 2018 under Jenkins’ bill.

Last week, Rep. Tim Greimel (D-Pontiac) offered such an amendment, but it was rejected with Republicans pointing out he did not indicate how he would fill the $1 billion hole such a move would leave in next year’s budget.

“House Republicans have turned needed tax relief for our middle-class residents into a political game,” Greimel said in a statement. “Instead of passing my proposal to cut the tax rate this year when I offered it last week, they waited a day and then introduced their bill sponsored by their vulnerable Lenawee County member. If this was a serious proposal and not pure politics – they would have supported my amendment last week or made it part of the calculations when crafting and passing the 2013 budget.”

He again did not indicate how he would pay for it.

Barnett said she did not agree with her colleague, and would not support dropping the rate immediately. As it is, the plan will likely result in fewer dollars going into the classroom and less money available for roads.

Rep. Jud Gilbert (R-Algonac) said the bill will not affect the School Aid Fund or transportation dollars in local communities.

He also said Democrats have complained about the new Corporate Income Tax, but have not introduced legislation to raise the rate on businesses, or other similar bills.

“I guess it’s a lot easier to complain, than compose a solution,” Gilbert said.

Rep. Tom McMillin (R-Rochester Hills) said Democrats have not proposed a balanced budget this term, as the House GOP did when it was in the minority last session.

Jenkins said with all the taxpayer reforms completed this year, this represented one of the most direct benefits to citizens, and will not have negative consequences.

“This bill is based on expected revenue and will not lead to program cuts or shifts in funds,” Jenkins said.

House Minority Leader Richard Hammel (D-Mount Morris Township) said in a statement that residents do deserve a tax break, but more could be done for those who do not earn as much as wealthier taxpayers.

“Tax policy shouldn’t be dealt with on the second-to-last day of session before the summer recess,” he said.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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