2011 House Bill 4361 / Public Act 38

Replace MBT, raise income tax, trim credits

Introduced in the House

March 1, 2011

Introduced by Rep. Jud Gilbert (R-81)

To eliminate the “modified gross receipts tax” component of the Michigan Business Tax, and change the rate of the remaining corporate income tax portion to 6 percent. This is what Gov. Rick Snyder has proposed, and would result in a substantial net reduction in state business tax levies.

Referred to the Committee on Tax Policy

April 27, 2011

Reported without amendment

With the recommendation that the substitute (H-1) be adopted and that the bill then pass.

Substitute offered

To adopt a version of the bill that incorporates all of Gov. Rick Snyder's income and business tax proposals. For complete details see House Fiscal Agency <a href="http://www.legislature.mi.gov/documents/2011-2012/billanalysis/House/pdf/2011-HLA-4361-3.pdf">analysis</a>.

The substitute passed by voice vote

Amendment offered by Rep. Jud Gilbert (R-81)

To revise various definitions that affect details of certain business and personal income tax deductions and credits.

The amendment passed by voice vote

Amendment offered by Rep. Mark Meadows (D-69)

To not reduce the current pension exemption in the personal income tax. Under the bill, goverment employee pension income for taxpayers born before 1946 would still be fully exempt, and for others, pension income below $45,120 would be exempt. Those born between 1946 and 1952 would have a partial exemption, and those born later no exemption until age 67, when they would get a limited exemption.

The amendment failed by voice vote

Amendment offered by Rep. Phil Cavanagh (D-17)

To retain the state Earned Income Tax Credit (EITC), rather than replacing it with a $25 per child payment to low income parents. The EITC is a refundable tax credit (or “reverse income tax”) that sends checks to low income workers. Under it, more than $300 million worth of Michigan tax revenue is redistributed annually to workers who have low incomes.

The amendment failed 48 to 59 (details)

Amendment offered by Rep. Bob Constan (D-16)

To not repeal an income tax credit for donations to municipal art projects, public broadcasting stations, libraries, universities, etc.

The amendment failed by voice vote

Amendment offered by Rep. Rudy Hobbs (D-35)

To not repeal an income tax credit for donations to homeless shelters, food banks and similar institutions.

The amendment failed by voice vote

Amendment offered by Rep. Jim Townsend (D-26)

To not repeal certain corporate subsidies and tax breaks for developers who rehab or redevelop certain “brownfield” properties.

The amendment failed by voice vote

Amendment offered by Rep. Jim Townsend (D-26)

The amendment failed by voice vote

Amendment offered by Rep. Jim Townsend (D-26)

The amendment failed by voice vote

Amendment offered by Rep. Rudy Hobbs (D-35)

To not repeal certain corporate subsidies and tax breaks for developers who rehab or redevelop certain “historic resource” properties.

The amendment failed by voice vote

Amendment offered by Rep. Vicki Barnett (D-37)

To revise the definition of “household resources” in a way that would raise the income cap on eligibility for certain personal income tax credits.

The amendment failed by voice vote

Amendment offered by Rep. Lisa Brown (D-39)

To earmark to the School Aid Fund an amount of revenue from the new corporate income tax that is equal to the amount distributed to the SAF by the Michigan Business Tax (which collected much more total revenue than the new tax).

The amendment failed by voice vote

Amendment offered by Rep. Shanelle Jackson (D-9)

To not repeal the unlimited state subsidy for film producers.

The amendment failed by voice vote

April 28, 2011

Passed in the House 56 to 53 (details)

To replace the Michigan Business Tax with a 6 percent corporate income tax; eliminate several corporate tax breaks and subsidies; repeal a gradual cut in the personal income rate from 4.25 percent to 3.95 percent; scale-back the current income tax exemption for pension income; replace the Earned Income Tax credit with a $25 per child payment to low income parents eliminate or reduce other income tax deductions and credits including the homestead property tax credit, personal exemption and dependent child credit; and make many other tax code revisions. For details see House Fiscal Agency <a href="http://www.legislature.mi.gov/documents/2011-2012/billanalysis/House/pdf/2011-HLA-4361-3.pdf">analysis</a>.

Received in the Senate

May 4, 2011

Referred to the Committee on Reforms, Restructuring, and Reinventing

May 12, 2011

Reported without amendment

With the recommendation that the bill pass.

Substitute offered

To adopt a version of the bill that cuts but does not eliminate the Earned Income Tax Credit, and which allows the recipients of some corporate subsidies granted in the form of "assignable" tax credits to "sell" these back to the state for 90 cents on the dollar.

The substitute passed by voice vote

Amendment offered by Sen. Steve Bieda (D-9)

To tie-bar the bill to Senate Bill 117, meaning this bill cannot become law unless that one does also does. SB 117 would require elected state officials to file personal financial disclosure statements.

The amendment failed 13 to 25 (details)

Amendment offered by Sen. Coleman Young (D-1)

To leave in place the current income tax exemption on all income from government pensions and some income from private sector pensions.

The amendment failed 19 to 18 (details)

Amendment offered by Sen. Steve Bieda (D-9)

To leave in place for persons age 67 and above the current income tax exemption on all income from government pensions and some income from private sector pensions.

The amendment failed 16 to 21 (details)

Motion to reconsider by Sen. Tupac Hunter (D-5)

The vote stripping out repeal of the income tax pension exemption.

The motion failed 14 to 24 (details)

Amendment offered by Sen. John Gleason (D-27)

To not repeal a $1,800 tax exemption for individuals who have a dependent age 65 or above living in the household.

The amendment failed 16 to 22 (details)

Amendment offered by Sen. Steve Bieda (D-9)

To not repeal a certain income tax deduction for dividend, interest and capital gain income earned by senior citizens.

The amendment failed 16 to 22 (details)

Amendment offered by Sen. Rebekah Warren (D-18)

To strip out a provision that cuts the Earned Income Tax Credit by 70 percent.

The amendment failed 14 to 24 (details)

Amendment offered by Sen. Virgil Smith (D-4)

The amendment failed 14 to 24 (details)

Amendment offered by Sen. Rebekah Warren (D-18)

To not repeal the income deduction for certain charitable donations.

The amendment failed 18 to 20 (details)

Amendment offered by Sen. Gretchen Whitmer (D-23)

To not repeal an income tax deduction for IRA money withdrawn and used for certain college expenses.

The amendment failed 17 to 21 (details)

Amendment offered by Sen. Morris Hood (D-3)

To not repeal an income tax exemption for certain unemployment insurance benefit income.

The amendment failed 16 to 22 (details)

Amendment offered by Sen. Gretchen Whitmer (D-23)

To not repeal a certain income tax deduction for child care expenses.

The amendment failed 18 to 20 (details)

Amendment offered by Sen. Rebekah Warren (D-18)

To repeal certain corporate tax breaks for money invested in certain businesses approved by state economic development officials.

The amendment failed 13 to 25 (details)

Amendment offered by Sen. Tupac Hunter (D-5)

To not reduce the homestead property tax credit individuals may claim against their income tax liability.

The amendment failed 17 to 21 (details)

Amendment offered by Sen. Glenn Anderson (D-6)

To prospectively repeal a provision exempting from income tax the pension income of government employees, if a court rules that this violates the constitution.

The amendment failed 17 to 21 (details)

Motion by Sen. Tupac Hunter (D-5)

To let stand a parliamentary ruling that Senators who might benefit from certain tax cuts in the bill must decide for themselves whether voting for it would be a conflict of interest.

The motion passed 26 to 12 (details)

Passed in the Senate 19 to 19 (details)

To replace the Michigan Business Tax with a 6 percent corporate income tax; eliminate several corporate tax breaks and subsidies; repeal a gradual cut in the personal income rate from 4.25 percent to 3.95 percent; scale-back the current income tax exemption for pension income; reduce the Earned Income Tax by 70 percent, eliminate or reduce other income tax deductions and credits including the homestead property tax credit, personal exemption and dependent child credit; and make many other tax code revisions.

Motion

To give the bill immediate effect (a two-thirds majority is needed).

The motion failed 25 to 11 (details)

Motion

To give the bill immediate effect.

The motion passed 26 to 12 (details)

Received in the House

May 12, 2011

Passed in the House 56 to 52 (details)

To concur with the Senate-passed version of the bill, which among other things cut rather than eliminated the state Earned Income Tax Credit for low income wage-earners.

Signed by Gov. Rick Snyder

May 25, 2011