Michigan House Bill HB5667

Michigan 2023-2024 Regular Session

• Introduced: 4/25/24
• Refer: 4/25/24

Caption

Individual income tax: rate; rollback to 4.05%; provide for. Amends sec. 51 of 1967 PA 281 (MCL 206.51).

Impact

Should HB 5667 be enacted, it would directly affect the calculation of taxable income for Michigan residents, resulting in lower tax liabilities for individuals. The bill is poised to foster a more favorable economic environment for taxpayers, particularly if state revenues outpace inflation. This could potentially lead to a more robust disposable income for consumers, thus stimulating local economic activity. It also sets a precedent for fiscal policy that could leverage state revenue growth to benefit taxpayers while maintaining a sustainable budgetary framework.

Summary

House Bill 5667 proposes amendments to the Income Tax Act of 1967, specifically aiming to adjust the tax rate applied to individual income tax in Michigan. The bill sets forth a tax rate of 4.05% for income earned from any source for individuals other than corporations. A notable feature of this legislation is the introduction of a mechanism that allows for future tax rate reductions based on the growth of general fund revenues relative to the inflation rate. This change signifies the legislature's intent to provide taxpayers with a sustained benefit in times of revenue growth, thereby linking taxation directly to state economic performance and inflation.

Contention

There are points of contention surrounding this bill, particularly regarding the balance between tax revenue generation for public services and the need for reduced tax burdens on individuals. Critics may express concerns about the long-term implications of continually linking tax rates to fluctuating state revenues, fearing it could undermine funding for essential public programs during downturns. Supporters argue that such a mechanism encourages fiscal responsibility within the state, ensuring tax policies adapt to the economic landscape rather than impose fixed burdens on residents regardless of fiscal conditions.