Whitmer signs bill to provide tax relief for retirees, low-income earners in Michigan

LANSING − Gov. Gretchen Whitmer on Tuesday overhauled Michigan's tax system, signing legislation that essentially reverses major changes to the tax bills of retirees and low-income earners her predecessor made over a decade ago.

In 2011, then-Gov. Rick Snyder signed into law a corporate tax cut bill that removed full and partial exemptions for public and private pensions and lowered the state's Earned Income Tax Credit (EITC), which helps subsidize the wages of low-income families.

"A single bill 12 years ago dealt a critical blow to people’s finances," Whitmer said at a signing ceremony. "Seniors had money that was promised to them 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."

The first bills introduced in the newly Democratic-controlled Legislature proposed restoring tax exemptions for pensioners, something Whitmer has long supported. Whitmer also kicked off the year with a promise to expand the state's EITC.

HB 4001 signed by Whitmer morphed into a proposal that taxes retirement income the same way private pensions were before Snyder's changes and bumps the state's EITC from 6% to 30% of the federal tax credit. The expanded EITC will deliver an estimated $750 in savings to eligible taxpayers.

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Whitmer and Democratic leaders also wanted to send $180 "inflation relief checks" to every Michigan tax filer but didn't obtain the Republican votes needed to put the bill into effect immediately.

With the costs of the proposed checks slated to preempt an automatic income tax rollback, surplus state revenues could trigger a decrease in Michigan's state income tax from 4.25% to 4.05%.

Whitmer said she is waiting for more information on the state's financial picture to determine whether the across-the-board income tax cut goes into effect. "I think that there is work yet to do to close the books," she said.

The lack of GOP support also delays implementation of the retirement and EITC tax relief Democrats hoped to deliver before the April 18 tax filing deadline.

"I would love to be able to say we got immediate effect and everyone's going to feel this immediately, but the Republicans wouldn't work with us to do that," Whitmer said.

While the tax package passed on a party-line vote in the state Senate, Democrats relied on the support of one GOP lawmaker, Rep. Mike Mueller, R-Linden, in the state House to move the bill to the finish line. He said in a Facebook post the cuts provide meaningful relief for seniors and working-class families.

State Rep. Dylan Wegela, D-Garden City, was the only Democratic lawmaker to vote against the tax bill because it will deposit up to $1.5 billion into a state economic development fund.

Clara Hendrickson fact-checks Michigan issues and politics as a corps member with Report for America, an initiative of The GroundTruth Project. Make a tax-deductible contribution to support her work at bit.ly/freepRFA. Contact her at chendrickson@freepress.com or 313-296-5743. Follow her on Twitter @clarajanehen.

This article originally appeared on Detroit Free Press: Tax relief restored for Michigan retirees, low-income earners