Michigan is collecting so much money, it may trigger an automatic cut to income tax rate

Michigan's 4.25 percent individual income tax will likely automatically drop to around 4.05 percent this year and beyond because of large growth in state revenue, legislative economists said.The House Fiscal Agency, in a report released Thursday, and the Senate Fiscal Agency, in an analysis published Wednesday, projected that the "trigger" cut will occur in 2023 — the first year a provision that calls for the reduction is in effect.
It was included in a 2015 road-funding law that raised fuel taxes and vehicle registration fees. The trigger applies when year-over-year general fund revenue growth exceeds 1.425 times the inflation rate.
Democratic Gov. Gretchen Whitmer told reporters it is "premature" to say the tax reduction will occur because officials have not closed the books for the 2021-22 fiscal year.Asked if she would try to amend the law to keep the reduction from happening — she wants to repeal a tax on pension income and boost a credit for lower-wage workers — she said: "I'm not going to speculate on what may or may not happen yet."

Both fiscal agencies assumed the tax cut in forecasts ahead of a Friday meeting during which administration and legislative officials are due to settle on figures Whitmer will use to craft a budget proposal. They forecast substantial declines in the general fund due to the reduction. The account covers most state spending except on schools and transportation.
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