2007 House Bill 5105 / Public Act 209

Repeal Detroit income tax reduction law

Introduced in the House

Aug. 8, 2007

Introduced by Rep. Steve Tobocman (D-12)

To repeal a law that requires Detroit to gradually reduce its city income tax to 2.0 percent for residents and 1.0 percent for non-residents who work in the city. The law lets Detroit postpone annual one-tenth of a percent reductions if certain conditions apply, which has been the case since 2004, but will not apply this year. Under the bill Detroit’s income tax would remain at 2.5 percent for residents and 1.25 percent for non-residents who work in the city.

Referred to the Committee on Tax Policy

Sept. 5, 2007

Reported without amendment

Without amendment and with the recommendation that the bill pass.

Sept. 25, 2007

Amendment offered by Rep. Phil Pavlov (R-81)

To only allow cities to levy an income tax if they do not pass or enforce an ordinance or regulation that prohibits local officials and peace officers from cooperating with federal immigration authorities in matters "concerning the immigration status" of a resident alien. Although the amendment passed, its provisions were not included in the Gaffney substitute that was subsequently adopted, and so is not in the House-passed version of the bill.

The amendment passed by voice vote

Substitute offered by Rep. Edward Gaffney (R-1)

To replace the previous version of the bill with one that repeals the requirement that Detroit must lower its city income tax, and allows the city to impose a 3 percent rax on residents, and 1.5 percent on nonresidents who work there.

The substitute passed 70 to 39 (details)

Oct. 3, 2007

Passed in the House 73 to 35 (details)

To repeal a law that requires Detroit to gradually reduce its city income tax to 2.0 percent for residents and 1.0 percent for non-residents who work in the city. The law lets Detroit postpone annual one-tenth of a percent reductions if certain conditions apply, which has been the case since 2004, but will not apply this year. Under the bill Detroit may levy an income tax allowed of 3 percent rax on residents, and 1.5 percent on nonresidents who work there.

Received in the Senate

Oct. 9, 2007

Referred to the Committee on Finance

Dec. 13, 2007

Substitute offered

To replace the previous version of the bill with one that does not freeze Detroit's income tax rate at 2.5 percent, but does suspend for two years the mandated gradual reductions in the rate.

The substitute passed by voice vote

Passed in the Senate 32 to 4 (details)

To suspend for two years a law that requires Detroit to gradually reduce its city income tax to 2.0 percent for residents and 1.0 percent for non-residents who work in the city.

Received in the House

Dec. 13, 2007

To concur with the Senate-passed version of the bill.

Passed in the House 65 to 42 (details)

Signed by Gov. Jennifer Granholm

Dec. 27, 2007