Lansing – Senator Mike Nofs today voted in favor of House Bill 4361, legislation that makes numerous reforms to Michigan’s business and income tax structure. Although this legislation included numerous provisions, a majority of the discussion has focused on the modification to the state tax structure. The version passed by the Senate contains $1 billion in tax relief for small businesses with a significantly modified income tax that will raise $300 million in revenue. The result is an initial net tax cut of $780 million over the next two years.
“During my campaign I stressed again and again the importance of improving our business climate and doing everything we could to help spur job creation and investment in Michigan. The Senate has considerably cut the governor’s original pension tax from $900 million to $300 million, while ensuring that small businesses receive much needed tax relief,” Nofs said. “Structural reforms, tied to reductions in state spending and a firm commitment from governor Snyder to pay down the state’s long-term debt, will put Michigan on the right track to ensure current debts are not passed on to the next generation.”
Small businesses, the employers that create and provide 80 percent of the jobs for Michigan workers will benefit from a lower tax burden. House Bill 4361 levels the playing field for businesses by offering a consistent collection method that may actually result in larger companies contributing more, rather than an advantage over the small companies that are in our communities and owned by our neighbors.
“By investing in the businesses already struggling to support our local economies, we have invested in the future economic vitality of Michigan. The tax reforms supported today by the Senate will allow small business owners to devote their resources to their business and employees rather than sending more to Lansing in taxes,” said Nofs.
Changes to the income tax exemption on certain types of retirement and pension income is the other major provision of this bill. Currently, only private pensions and unmatched income on 401(k) plans over $45,120 for an individual or $90,240 for a couple have income tax levied against them. The legislation passed by the Senate makes a number of alterations to what pension and retirement income will now be subject to the income tax (see table below). This tax will also apply to the pensions and retirement income of retired legislators.
“I received input from hundreds of constituents who have strong convictions on both sides of the pension tax issue. Extensive modifications have occurred during Senate debate on this proposal as a result of citizen input. With citizen concerns in hand, I have lobbied the governor and Senate leadership for common sense amendments to this legislation”, Nofs said. “It is my belief that the improvements we made to the governor’s original plan provide protection for the vast majority of Michigan’s current retirees. It is up to us to ensure that the current legacy of debt is not passed on to our children and grandchildren.”