A coalition of Republican lawmakers, business groups filed a lawsuit against the Michigan treasurer, Aiming permanent roll back of income tax to 4.05% from 4.25%.
Lawsuit challenges Attorney General Dana Nessel’s opinion limiting cut to current year
The complaint, filed on Thursday, demands declaratory relief from a judge versus State Treasurer Rachael Eubanks in order to permanently extend the income tax drop, and requests that a judge rule by Dec. 15, 2023, to offer clarity on future tax rates.
The income tax rollback was made possible by a state revenue surplus.
Permanently adopting the tax decrease would cause big issues for the Whitmer administration, because the recently enacted 2024 budget practically depleted the surplus and is based on the premise that the income tax rate will revert to 4.25% in 2024.
GOP lawmakers along with former Republican Gov. Rick Snyder included wording in a 2015 road funding bill that reduced the state’s income tax rate from 4.25% to 4.05% if Michigan generated enough excess cash in its coffers.
One-Time Reduction in Income Tax Rather Permanent One
Nessel argued in a March opinion that the rollback would result in a one-time reduction in income tax for 2023 only, instead of a permanent one. Snyder and Republican legislative leaders from 2015 disagreed with Nessel.
When Eubanks revealed the tax decrease, she stated that it would be a one-time event until the state’s excess revenue cap was surpassed again.
Republican House Minority Leader Matt Hall, R-Richland Township, stated that Republicans will continue to campaign for a permanent tax cut.
Under the tax cut, a household with taxable income of $50,000 will save around $100 as they file their taxes next year. The rollback will cost the state around $700 million in annual income for the fiscal year 2023.
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