Snyder: Let’s cut last year’s taxes, give $100M in relief to tens of thousands

LANSING — Gov. Rick Snyder is planning retroactive tax relief that will put money in the pockets of tens of thousands of Michigan workers this year, according to sources familiar with the budget Snyder will unveil Wednesday.

Details about the tax relief plan were scant Thursday, but a relatively modest tax cut or credit targeted at workers with low or moderate incomes — with a price tag in the range of $100 million — is consistent with public statements Snyder has made.

The relief will be retroactive to 2013 — which presents logistical challenges — but also makes sense in an election year for both the governor and the Legislature.

At a revenue-estimating conference this month, state officials determined Michigan has a combined $971-million surplus for the fiscal years 2013-15. Budget Director John Nixon cautioned that all but about $325 million of the surplus is “onetime money” that can’t be built into ongoing expenditures such as a tax cut.

Nixon told the Free Press on Wednesday the tax relief will be “modest,” but “targeted to where it’s needed the most,” and the administration will be creative in terms of “when do you start it, how is it put together.”

On Thursday, a source familiar with the contents of the budget confirmed Nixon’s timing reference pointed to the retroactive nature of the planned relief, which could take the form of a tax credit and would require approval from the Republican-controlled Legislature.

No details were released on exactly how many people would benefit, or what the income cap would be, but the number is expected to be at least in the tens of thousands.

Snyder’s proposal could have to compete with proposals from GOP lawmakers.

The Senate Finance Committee approved legislation this week that would cut the income tax rate from 4.25 percent, where it stands currently, to 3.9 percent by 2017. The bill still requires approval of the full Senate and House.

The cut would result in a loss of $143.6 million in the first year of the phaseout, according to an analysis of the bill, and up to $873.5 million by 2017, when the bill is fully implemented.

House Republicans introduced similar legislation Wednesday, gradually lowering the rate to 4.05 percent by 2016, and tying additional reductions to how much tax revenues were generated by the reduced rate.

“The governor is going to talk about something on Wednesday,” Senate Majority Leader Randy Richardville, R-Monroe, told reporters Thursday. “I think he’s built a pretty good relationship with us. We take his ideas, we think we improve on them, and he signs them.”

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Posted by Tribune News Services

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