Personal Taxes

Whitmer vetoes GOP plans to chop taxes on personal revenue, gas

LANSING — Gov. Gretchen Whitmer on Friday issued a double-barreled veto, nixing a massive tax cut passed by the Michigan Legislature and promising to reject a pause in the state gas tax.

Both moves were expected.

Whitmer is instead calling for more targeted tax relief, such as a repeal of the state pension tax and a tripling of the state Earned Income Tax Credit for low income earners. She also wants a pause in the sales tax charged on gas, which unlike the fuel tax does not support road and bridge repairs.

Senate Majority Leader Mike Shirkey, R-Clarklake, Whitmer accused of depriving Michigan residents of tax relief for partisan reasons.

The Republican Legislature’s $2.5-billion tax cut plan would have rolled the personal income tax rate back from 4.25% to 3.9%, increased the amount of all retirement income that’s tax free to $40,000 for individuals and $80,000 for couples, reduced the eligibility age for that break to 62 from 67, and would have created a new $500 tax credit for each child or qualified dependent in a house.

Whitmer said it would have ongoing costs of billions per year, ending state programs when most of the state’s roughly $7-billion surplus is only short-term. State budget officials had said it also would violate federal rules that said federal stimulus money cannot be used to pay for tax cuts.

Whitmer confirmed she also will veto a pause in the state’s 27-cent-per-gallon fuel tax, despite calling for a pause in the federal fuel tax of just over 18-cents per gallon, as a way of fighting high gas prices. Although the bill had passed both chambers, it had not reached Whitmer’s desk as of early Friday evening, according to the legislative website.

On Friday, Whitmer proposed a pause in the 6% sales tax charged on fuel purchases, a move that is backed by both Senate Republicans and Democrats, but opposed by House Republicans.

More:Whitmer to veto GOP tax cut, calls on lawmakers to join formal negotiations

More:Whitmer calls for temporarily suspending Michigan’s sales tax on gas

In her veto letter, Whitmer said the tax cut plan would force “tax hikes on families or deep and painful cuts to services, hurt our children’s ability to catch up in school, force layoffs of cops and firefighters, and kneecap our ability to keep fixing crumbling roads.”

The proposed pause in the state gas tax, because it was not given immediate effect by the Legislature, “would not take effect until 2023, and “does nothing for Michiganders facing pain at the pump right now,” she said.

Shirkey also slammed Whitmer’s Friday proposal to pause the sales tax on gas.

“The governor isn’t just a day late and a dollar short on this issue, she’s weeks late and millions of dollars short. Other than writing a letter to (US House Speaker) Nancy Pelosi, she’s been absent as Michiganders are struggling with record-high gas prices. Now she’s proposing a half-measure that won’t save drivers as much as the bill we’ve already passed.”

House Speaker Jason Wentworth, R-Farwell, also criticized the vetoes.

“The governor talks a good game about tax cuts when she speaks to the public,” Wentworth said. “But behind the scenes she’s doing everything she can to keep money out of the pockets of Michigan families and kill any chance they have of seeing relief .”

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4. Read more on Michigan politics and sign up for our elections newsletter.

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