Two-thirds of Michigan businesses are in line for a tax rollback next year. The rest will pay a six percent tax on profits. Pensions in Michigan will be taxed for the first time. An income tax reduction will be delayed to save money to help balance a budget that reduces spending on schools, local governments, and higher education.
These are all details of a sweeping tax overhaul signed into law yesterday by Governor Rick Snyder.
Snyder made cutting and simplifying the taxes paid by businesses his marquee campaign promise, and he got to fulfill that promise just a few days short of five months in office.
“It will create jobs. I’m confident of that.”
The governor says Michigan’s business tax plan will be simpler, and fairer. Only a third of Michigan businesses – those with lots of shareholders and registered as “C” corporations under the tax code – will pay the six percent tax on profits after expenses.
The governor acknowledged some parts of the plan are controversial – especially taxing pensions. Next year, someone living on a $50,000 pension can expect to pay about $1,400 in state income tax.
Snyder says extending the income tax to people born after 1946 with pension income exceeding $40,000 means that share of the burden won’t be shifted to younger people.
“That’s going to help on that issue of keeping our young people right here in Michigan.”
And the governor – a former tech company CEO and venture capitalist -- says the state’s new business tax system should be solid enough to endure for another 50 years.