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2007 House Bill 5194: Increase income tax from 3.9 percent to 4.35 percent

Public Act 94 of 2007

  1. Introduced by Rep. Steve Tobocman (D) on September 7, 2007, to “clean up” the income tax statutory language related to various tax deductions that went into effect in the past, with makes no substantive change in the law. The bill was later made the "vehicle" for an income tax hike (see final House- and Senate-passed versions).
    • Referred to the House Tax Policy Committee on September 7, 2007, and discharged from further consideration by the committee and directly to House floor on Sept. 14.
    • Substitute offered by Rep. Steve Tobocman (D) on September 14, 2007, to increase the state income tax to 4.6 percent, which would fall to 3.9 percent if the legislature passes and the people approved House Joint Resolution X, which would repeal the current prohibition on a graduated income tax in Michigan. The substitute passed by voice vote in the House on September 14, 2007.
    • Substitute offered by Rep. Steve Tobocman (D) on September 18, 2007, to replace the previous version of the bill with one that does not contain a tax hike, but instead just authorizes a $250 income tax exemption for disabled veterans. The substitute passed by voice vote in the House on September 18, 2007.
  2. Passed 77 to 26 in the House on September 18, 2007, to authorize a $250 income tax exemption for disabled veterans. The bill was passed and sent to the Senate as a "vehicle" for a possible income tax hike, but without any actual rate increase included. This was done because bills must "lay over" in the other body for at least five days before being voted on, and if a tax increase is to be approved by Oct. 1 it is necessary to have a "vehicle" bill that has done so.
    Who Voted "Yes" and Who Voted "No"

  3. Received in the Senate on September 19, 2007.
    • Referred to the Senate on September 19, 2007.
    • Substitute offered in the Senate on September 23, 2007, to replace the previous version of the bill with one that removes the income tax rate increase, removes the "tie bar" to a possible new service tax, and tie-bars the bill to a number of government financial reforms, including school employee health insurance and pension changes, Medicaid and welfare reforms, and more. (Here is the complete list of reform bills: SB 1, SB 395, SB 396, SB 397, SB 398, SB 418, SB 419, SB 420, SB 421, SB 546, SB 547, SB 549, SB 622, SB 632, SB 772, SB 773, SB 790, SB 791, SB 792, SB 793 and HB 4246, HB 4266, HB 4799 and HB 4800). The substitute passed 21 to 17 in the Senate on September 23, 2007.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Michael Switalski (D) on September 23, 2007, to tie-bar the bill to House Bill 5198, meaning this bill cannot become law unless that one does also. HB 5198 is a "vehicle" bill for a possible tax on some services. The amendment failed 18 to 20 in the Senate on September 23, 2007.
      Who Voted "Yes" and Who Voted "No"

  4. Passed 21 to 17 in the Senate on September 23, 2007, to adopt a version of the bill that does not contain an income tax rate increase, does not contain a "tie bar" to a possible new service tax, but is tie-barred to a number of government financial reforms and policy changes, including school employee health insurance and pension changes, Medicaid and welfare reforms, privatizing some prison support services, and more (see Senate substitute for full list.) This and the passage of Senate Bills 237 and 511 establish the terms of negotiations between the House and Senate on taxes and spending.
    Who Voted "Yes" and Who Voted "No"

  5. Received in the House on September 23, 2007, to concur with a Senate-passed version of the bill. The vote sends the bill to a House-Senate conference committee to work out the differences. Failed 0 to 108 in the House on September 23, 2007.
    Who Voted "Yes" and Who Voted "No"

  6. Received in the Senate on September 24, 2007.
  7. Passed 19 to 19 in the Senate on October 1, 2007, to increase the state income tax from 3.9 percent to 4.35 percent, effective Oct. 1, 2007. The bill will take an additional $765 million, and is part of a deal to avoid state spending cuts that includes a $750 million service tax (House Bill 5198, later replaced by a 21.99 percent Michigan Business Tax surcharge), plus modest school employee pension reform (Senate Bills 546 and 547), a bill to make it easier for school districts to seek competitive bids on employee health insurance (Senate Bill 418), legislation limiting “double dipping” by retired school employees (House Bill 4800) and a repeal a prohibition on contracting out mental health services in state prisons (Senate Bill 622). Note: the Lieutenant Governor (Democrat John Cherry) presides over the Senate and cast the 20th and deciding vote.
    Who Voted "Yes" and Who Voted "No"

  8. Received in the House on September 25, 2007.
  9. Passed 57 to 52 in the House on September 30, 2007, to increase the state income tax from 3.9 percent to 4.35 percent, effective Oct. 1, 2007. The bill will take an additional $765 million, and is part of a deal to avoid state spending cuts that includes a $750 million service tax (House Bill 5198, later replaced by a 21.99 percent Michigan Business Tax surcharge), plus modest school employee pension reform (Senate Bills 546 and 547), a bill to make it easier for school districts to seek competitive bids on employee health insurance (Senate Bill 418), legislation limiting “double dipping” by retired school employees (House Bill 4800) and a repeal a prohibition on contracting out mental health services in state prisons (Senate Bill 622).
    Who Voted "Yes" and Who Voted "No"

  10. Signed by Gov. Jennifer Granholm on October 1, 2007.

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