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House GOP revises income tax cut plan, waits to vote

LANSING, Mich. (AP) — Michigan House Republicans on Tuesday significantly revised their income tax cut plan, proposing to drop the 4.25 percent rate to 3.9 percent over four years and no longer calling for the tax to be phased out entirely over decades.

Legislation that cleared a committee last week would have cut the tax to 3.9 percent in 2018, saving taxpayers $680 million in the next fiscal year and $1.1 billion the following year, according to the nonpartisan House Fiscal Agency. The bill also would have eliminated the tax by 2057.

Under the new version, the tax would drop by one-tenth of a percentage point annually from 2018 through 2020 and then 0.05 percentage points in 2021. An existing law that provides for potential year reductions starting in 2023 — if general funds outplace inflation by a minimum amount — would stay intact.

A final vote was not taken, however, an indication that the majority was still short of enough support to send the legislation to the GOP-led Senate. The House could vote as early as Wednesday. Republican Gov. Rick Snyder earlier Tuesday again expressed “serious concerns” with cutting the income tax.

“This is about what’s simple vs. what’s complicated,” the bill sponsor, Republican Rep. Lee Chatfield of Levering, said of the revisions. “We believe the solution that’s put before us … achieves the simple goal of providing tax relief across the state.”

Before the changes were made, more than half of Michigan’s 15 university presidents lobbied against the bill outside the House chamber. State support for the schools is down $363 million, or nearly 19 percent, from 15 years ago. Average tuition costs were sixth-highest in the country last year, according to the Michigan League for Public Policy.

“Our fear is that if the resources available to state government are constrained by such a large tax cut, we won’t be able to maintain accessibility to a great public higher education at the same costs now. Families are already struggling to pay for college, and we don’t want to make those challenges greater,” said University of Michigan-Ann Arbor President Mark Schlissel. He urged lawmakers to “slow down” and fully consider the consequence of a tax cut that could “have a profound and adverse impact on our state’s future.

Snyder said at a Michigan Farm Bureau event that he puts “fiscal responsibility at the forefront of doing things.”

He noted that as part of laws that raised fuel taxes and vehicle registration fees to improve roads and bridges, $600 million annually will eventually be shifted from the general fund toward transportation and homeowners and renters will get $200 million in tax relief a year. He said the current “one-time” budget surplus should instead be put into savings.

“I’m not sure where you get a billion dollars a year in the next year or the next several years without making huge cuts to things,” Snyder said.

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