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Lawmakers look to phase out Michigan income tax

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MICHIGAN (NEWSCHANNEL 3) - While filing your taxes, you may notice that Michigan taxes you more than four percent of your income, but that may soon change.

Currently Republican lawmakers in the State House are trying to reduce the personal income tax.

The first House bills of the legislative session aim to completely repeal Michigan’s personal income tax, but that’s not all. Republicans also have their eyes set on repealing the pension tax that was signed into law recently.

If you feel you pay too much in state taxes, Michigan House Republicans have a plan.

State Representative Lee Chatfield is moving a bill forward that would reduce Michigan’s personal income tax starting in 2018.

“I believe this is something the people of Michigan are wanting,” said Rep. Chatfield. “I think this is a great way to grow our economy and get us back to where we were before the recession hit Michigan.”

Michigan’s income tax currently claims 4.25 percent of your paycheck. Rep. Chatfield’s bill would reduce that to 3.9 percent in 2018 and by 0.1 percent every year until the personal income tax is completely eliminated.

“I think this is a responsible way of phasing out the income tax, where we can budget appropriately from year to year,” said Rep. Chatfield. “But the very first part of this bill delivers on a promise that was made to the people of Michigan in 2007 and what this legislature is doing is taking that promise seriously, reducing it immediately to 3.9 percent because that’s what the people of Michigan were promised. That’s what we are going to deliver on.”

While Rep. Chatfield says Michiganders need tax relief, the Democratic house leaders say not so fast.

“The governor just said to deal with our infrastructure we have to raise four billion dollars in new resources,” said Rep. Sam Singh. “So doing a big income tax cut is really going to be unfeasible at this point in time.”

House Republicans aren’t stopping at cutting the personal income tax. Representative Tom Barrett is trying to repeal Michigan’s pension tax.

“We have a lot of retirees who are paying this pension tax that they weren’t anticipating for their working careers,” said Rep. Barrett. “It was sprung on them unfairly in my opinion, after they had retired it became a liability they had to pay.”

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