Gov. Whitmer, Democratic leaders want to send 'inflation relief' checks to all taxpayers

LANSING − Gov. Gretchen Whitmer and Democratic legislative leaders announced Friday they have agreed on a tax plan that will "deliver inflation relief checks to all Michigan taxpayers," among other measures.

The announcement came as bills to cut taxes on Michigan retirees and to increase the Earned Income Tax Credit are expected to go to a conference committee early next week, to resolve differences between the House and Senate versions of the bills.

“We are poised to deliver the biggest tax relief to Michiganders in decades, and it will impact and benefit every taxpayer across the state,” Whitmer said at an event in Detroit.

In a news release, Whitmer, along with Senate Majority Leader Winnie Brinks, D-Grand Rapids, and House Speaker Joe Tate, D-Detroit, said their "Lowering MI Costs" plan will repeal retirement taxes increased under former Gov. Rick Snyder to save 500,000 households an average of $1,000 a year, and increase the Working Families Tax Credit (formerly known as the Earned Income Tax Credit) to give about 700,000 Michiganders an average annual increase of $3,150.

Those features of the plans are similar to measures announced previously, which include bills to increase the tax credit for low and moderate-income earners to 30% of the federal tax credit, up from 6%.

But in the newest development, the plan also involves sending checks to all Michigan taxpayers to ease the effects of inflation, the release said. Whitmer, who previously called for $500 checks for all working families, would not say Friday how large the checks would be.

Whitmer said greater detail on the plan would be made available Monday.

"I anticipate and look forward to bipartisan support, because this is one of those opportunities that I think everyone in the Legislature is going to want to be a part of," Whitmer said.

Senate Minority Leader Aric Nesbitt, R-Porter Township, said he is "cautiously optimistic" about the proposal offering immediate inflation relief.

“But when it comes to lower taxes, her actions have too frequently failed to match her words," Nesbitt said of Whitmer. "Michiganders have too often played Charlie Brown to the governor’s Lucy as she yanks away her promises of tax relief at the last second.”

The governor, who has vetoed Republican bills providing for across-the-board cuts to the income tax rate, saying such proposals are not sustainable, is to present her 2024 budget on Wednesday. The measures she outlined Friday would have to be voted on in the Legislature, where Democrats hold slim majorities in each chamber.

More:Lawmakers approve $200M for Escanaba paper mill as part of $1.1B spending bill

“Michiganders sent a clear message in November. They want leaders who are going to get things done that help their families get ahead," Whitmer, Brinks and Tate said in a joint statement.

“Right now, inflation has driven the cost up on everyday goods, which is squeezing household budgets and forcing families to forego necessities. That’s why they sent us to Lansing to lower costs and put more money back into people’s pockets."

The state is sitting on a record budget surplus of about $9 billion, but much of it is considered "one-time" money that can't be used for ongoing programs.

There has been speculation Democrats would include measures in the legislation that would reduce fiscal year 2022 general fund revenues in a way to prevent the triggering of an across-the-board income tax rollback of up to 0.2 percentage points, which is set out in a 2015 law when revenues exceed inflation by a certain amount. There was no mention of that issue in Friday's release, and Whitmer did not rule out diverting $800 million in 2022 general fund revenue to a separate economic development fund.

House Minority Leader Matt Hall, R-Richland Township, said he remains concerned about that prospect. “This latest scheme crafted behind closed doors appears to be the governor’s newest attempt to cancel the income tax cut that’s due to every Michigan family, worker, and small business this year and every year afterward," Hall said.

Whitmer declined to say how the plan would treat different forms of retirement income or income earned by seniors still in the workforce.

“As I have said consistently, 12 years ago, I think a real injustice was done to people to balance the state budget,” Whitmer said, referring to the 2011 GOP corporate tax cut paid for by reducing the EITC and removing tax exemptions for certain pension income.

“I’m trying to undo the harm that was done 12 years ago, and so that’s job one.”

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.