State Rep. Paul Opsommer (R-DeWitt) voted today to approve the creation of Governor Snyder’s new simplified tax code, designed to remove many business and personal tax exemptions. Part of the plan creates a new 6-percent flat corporate tax in Michigan, which the representative said would help install a more positive job creation environment in the state.
“The most important thing we can do in addressing job creation in Michigan is to look at the issue head on, based on brutal facts and not wishful thinking,” said Opsommer.
“The reality is that we rank 48th worst in the country for corporate tax competitiveness and that even with recent improvements we’re still 45th worst for unemployment. We desperately needed to create a better environment for businesses to create jobs and we took an important step forward today, and while there were many tough choices with budget and tax implications what we had to look at the whole package in its entirety and do what was needed. Today the House voted in a way it hasn’t for a long time, which was to vote not based on what we wished we could do in a perfect world but how we needed to vote based on reality.”
The flat tax plan is also part of an overall effort to simplify Michigan’s taxes as a whole by removing many business and personal tax exemptions and credits. Opsommer pointed out that one goal of more simplified flat taxes was to try to treat revenue and taxes more equally, rather than trying to pick winners and losers where one business or one person down the street pays significantly more or less than others. Several credits and exemptions will begin to be phased out if the bill becomes law.
Business credits that have already been awarded under the MBT, such as MEGA, brownfield redevelopment, renaissance zone, film production and other credits would be retained for the duration of the current agreements, but no additional credits would be awarded after 2011.
Residents who are 67 or older for any part of 2012 will not be affected and will maintain their current exemption status on pension income. Those who turn 60 to 66 during 2012 will have an exemption on up to $20,000 of any retirement income ($40,000 for those who file jointly; in the case of joint filing with couples of different ages, it is the older filer’s age that applies).
All other residents born after 1952 will see retirement income exemptions completely removed until they turn 67, when they will become eligible to receive a $20,000/$40,000 exemption against all income;
“We’re trying to be fair, right now we have people who retired at a relatively young age who are not being taxed on their pension while we have older people going back into the workforce who see their income still get taxed,” said Opsommer. “Overall the way we would phase the new tax code in there are going to be many people who won’t be affected at all. There have been many myths about the bill, and for example social security income and military pensions will remain untaxed”.
The bills, HB 4361-62 and 4479-4484, have been sent to the Senate for approval.