Report: Proposed Tax Cuts Would Save Average Household Approx. $100 a Year

By: Josh Sidorowicz Email
By: Josh Sidorowicz Email

With state lawmakers staring down a nearly $1 billion projected surplus on the budget, just about everybody has an idea of where they'd like to see the money spent.

One of those ideas could mean tax cuts, if some Republican lawmakers get their way.

House Speaker Jase Bolger, R-Marshall, has come out strong for an income tax cut, a proposal which would bring the rate down from its current 4.25% to 3.9%.

For the average household making about $40,000-50,000 per year, it could mean savings of about $100 per year, according to a report released Wednesday by the non-partisan Michigan League for Public Policy.

The report also says nearly one in four Michigan households would see little to no difference at all in their taxes with a cut.

"It's not tax cuts that grow the economy," said Judy Putnam, a spokesperson for the group. "A cut disproportionally benefits the people with bigger incomes, the lowest income families would get 12 dollars per household, many of them would get nothing."

Economist Charles Ballard at Michigan State University said tax cuts now could pose issues down the road.

"If we build in a big tax cut now that could really make it very difficult for us to fix our budget problems in the future," Ballard said.

Any kind of tax cut would be long term, which would require a sustainable flow of money.

"That sort of ties the hands of the elected officials for the future, that's why people are talking about just give a one time rebate," Ballard said.

John Nixon, the state's budget director said last week he favored a rebate over a cut, but said he'd prefer to see the one time infusion used to roads or education.

"You don't want to build that into ongoing tax cuts or ongoing spending," Nixon said.

It's a notion Speaker Bolger's camp counters saying they'd rather see long term sustainable investments in areas like roads and education instead of one time deals.

The one clear thing in all of this, a winner in this debate won't be emerging any time soon.


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