By Zach Gorchow
Gongwer News Service
Michigan’s personal income tax will remain at 4.25 percent after the Supreme Court unanimously decided not to hear an appeal from business groups, Republican legislators and others that the rate should have fallen to 4.05 percent under a 2015 law.
As part of the 2015 road funding package, which included tax and fee increases, Republican legislators included a provision that would reduce the income tax should revenue growth exceed economic growth. In the early 2020s, thanks to the COVID revenue surge, that threshold was hit, and the income tax rate was reduced for 2023 to 4.05 percent.
But the administration of Governor Gretchen Whitmer determined that the language meant the decline was for one year only and raised the rate back to 4.25 percent for 2024. A coalition of groups, including the Associated Builders and Contractors and the National Federation of Independent Businesses, sued. Republican legislators joined them, calling the interpretation at odds with the intent of the law to keep the rate at 4.05 percent.
Former Governor Rick Snyder, who signed the bill with the trigger, also called the Whitmer administration’s actions incorrect.
But in March, a unanimous Court of Appeals held the Department of Treasury, with guidance from Attorney General Dana Nessel, was correct (See Gongwer Michigan Report, March 7, 2024). That ruling even included Chief Judge Michael Gadola, who was once Snyder’s legal counsel (not at the time the law in question was signed).
Although the Supreme Court has a 4-3 majority of justices nominated by the Democratic Party to justices nominated by the Republican Party, none of the Republicans dissented from the brief order in Associated Builders and Contractors of Michigan v. State Treasurer (SC Docket No. 166871). The order said only that the court was denying the application for leave to appeal the Court of Appeals ruling because it was not persuaded the questions presented should be reviewed.
Shane Hernandez, president of ABC, called the ruling another burden for contractors facing high costs. And Amanda Fisher, Michigan state director for the NFIB, said it’s unfortunate the court overrode “what was and is clearly the purview of the Legislature.”
The Mackinac Center for Public Policy brought the lawsuit on behalf of several plaintiffs.
“Taxpayers just lost $700 million a year without a single vote in the Legislature,” said Patrick J. Wright, vice president for legal affairs at the Mackinac Center, in a statement. “This case is a reminder that the Legislature must be extremely precise in order to avoid a misguided interpretation of the law by a future administration opposed to its original goals.”
Gongwer News Service
Michigan’s personal income tax will remain at 4.25 percent after the Supreme Court unanimously decided not to hear an appeal from business groups, Republican legislators and others that the rate should have fallen to 4.05 percent under a 2015 law.
As part of the 2015 road funding package, which included tax and fee increases, Republican legislators included a provision that would reduce the income tax should revenue growth exceed economic growth. In the early 2020s, thanks to the COVID revenue surge, that threshold was hit, and the income tax rate was reduced for 2023 to 4.05 percent.
But the administration of Governor Gretchen Whitmer determined that the language meant the decline was for one year only and raised the rate back to 4.25 percent for 2024. A coalition of groups, including the Associated Builders and Contractors and the National Federation of Independent Businesses, sued. Republican legislators joined them, calling the interpretation at odds with the intent of the law to keep the rate at 4.05 percent.
Former Governor Rick Snyder, who signed the bill with the trigger, also called the Whitmer administration’s actions incorrect.
But in March, a unanimous Court of Appeals held the Department of Treasury, with guidance from Attorney General Dana Nessel, was correct (See Gongwer Michigan Report, March 7, 2024). That ruling even included Chief Judge Michael Gadola, who was once Snyder’s legal counsel (not at the time the law in question was signed).
Although the Supreme Court has a 4-3 majority of justices nominated by the Democratic Party to justices nominated by the Republican Party, none of the Republicans dissented from the brief order in Associated Builders and Contractors of Michigan v. State Treasurer (SC Docket No. 166871). The order said only that the court was denying the application for leave to appeal the Court of Appeals ruling because it was not persuaded the questions presented should be reviewed.
Shane Hernandez, president of ABC, called the ruling another burden for contractors facing high costs. And Amanda Fisher, Michigan state director for the NFIB, said it’s unfortunate the court overrode “what was and is clearly the purview of the Legislature.”
The Mackinac Center for Public Policy brought the lawsuit on behalf of several plaintiffs.
“Taxpayers just lost $700 million a year without a single vote in the Legislature,” said Patrick J. Wright, vice president for legal affairs at the Mackinac Center, in a statement. “This case is a reminder that the Legislature must be extremely precise in order to avoid a misguided interpretation of the law by a future administration opposed to its original goals.”
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