Michigan's fleeting tax break will indeed be fleeting, as the Michigan Court of Appeals confirmed yesterday, disappointing Republicans and business moguls who hoped for a permanent cut. In a unanimous ruling, the court maintained the personal income tax reduction in 2023 was not to be ongoing, as stated by the Gov. Gretchen Whitmer administration, reported by The Detroit Free Press.
Last year's legislation reduced the Michigan personal income tax rate from 4.25% to 4.05%, but only for one year, the panel of judges declared. The Court of Appeals backed the position of the Democratic Attorney General Dana Nessel, who had interpreted the 2015 law in question to mean that the reduction was a one-off adjustment for the 2023 tax year. According to The Detroit News, Nessel's treatment was adopted by Whitmer's administration and a December Court of Claims opinion had previously supported resuming the 4.25% tax rate for 2024.
The court's decision sidelines the arguments put forth by two business groups, two Republican lawmakers, and several taxpayers, who had petitioned for the lower 4.05% rate to be cemented indefinitely. "The statute contains no language indicating a legislative intent to make the rate reduction permanent," the judges wrote in their opinion, effectively preventing what could have led to cumulative cuts, possibly, resulting in a zero income tax landscape, as detailed in the court's decision obtained by The Detroit Free Press.
The legal skirmish drew in views from both sides of the aisle, with former Republican Gov. Rick Snyder who signed the 2015 road funding law, labeling Nessel's opinion an "unreasonable overreach" amid a surplus of tax revenue last year, as reported by The Detroit News. However, with the appeals court having the final say, state Treasurer Rachel Eubanks announced the tax rate's return to 4.25% for the 2024 tax year, according to bridgemi.com.
The Mackinac Center for Public Policy, a think tank that represented the plaintiffs with Patrick Wright, its vice president for legal affairs, saying "The question in this case has always been what is the clearest reading of the statute," remained staunch in their belief that the best interpretation of the law dictated a permanent tax reduction. They are considering an appeal to the Michigan Supreme Court, as noted in Wright's statement obtained by both The Detroit News and bridgemi.com.
