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Michigan lawmakers push to reverse the state income tax hike, reigniting debate over fiscal responsibility and economic relief.
House Republicans Lead Effort to Undo Michigan Income Tax Hike
A bipartisan coalition in the Michigan House of Representatives passed House Bill 4170, aiming to reinstate a lower state income tax rate and overturn the 2024 tax increase implemented under Governor Gretchen Whitmer. The bill seeks to return the tax rate to 4.05%, reversing an increase to 4.25% that took effect on January 1, 2024.
The move follows controversy surrounding the application of a 2015 state law, which mandated automatic tax reductions when revenue growth exceeded inflation. That law was triggered in 2023, temporarily lowering the tax rate. However, the Whitmer administration, backed by Attorney General Dana Nessel, interpreted the law to mean the cut was not permanent, resulting in the 2024 increase.
Rep. Ken Borton (R-Gaylord), a key proponent of HB 4170, emphasized that the bipartisan vote reflected broad dissatisfaction with the tax hike.
“Today’s bipartisan vote proves just how unpopular the 2024 Democrat income tax hike really was,” Borton said. “Career politicians like Gov. Whitmer shouldn’t be able to twist the meaning of state law in order to grow government and fund their own excessive spending.”
Economic Impacts and Partisan Divide
House Republicans argue that restoring the 4.05% tax rate is critical for Michigan workers and families facing rising living costs. Rep. Bill G. Schuette (R-Midland) pointed to escalating expenses for groceries, fuel, and childcare as justification for immediate tax relief.
“Michiganders are struggling to pay grocery bills, fill up their gas tanks, cover their mortgages or rent for the month and keep up with rising childcare costs,” Schuette said. “Our priority in the Legislature should be returning money to hardworking taxpayers so they can help make ends meet.”
Opponents of HB 4170, primarily Democratic lawmakers and fiscal policy experts, caution that reducing tax revenue could hinder state programs and services. They argue that the extra revenue has been vital for infrastructure projects, education funding, and social programs.
A financial assessment by the House Fiscal Agency estimated that the proposed tax cut would cost the state over $700 million annually. However, Republican legislators counter that January 2025 revenue projections indicate a surplus of $850 million, more than enough to cover the tax rollback.
Senate Battle and Broader Implications
The bill now moves to the Michigan Senate, where Democrats hold a narrow majority. Its passage remains uncertain, as Gov. Whitmer has signaled opposition to rolling back the tax hike, framing it as a necessary measure to maintain Michigan’s financial stability.
Critics within the administration argue that the tax cut benefits higher-income earners more than working-class residents and could lead to budget shortfalls in future years. However, proponents assert that failing to uphold the 2015 automatic tax reduction law undermines public trust in government policies.
Economic analysts suggest that if HB 4170 passes the Senate, it may face a gubernatorial veto, setting up a larger political battle over tax policy leading into the 2026 election cycle.
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