Reforms necessary to strengthen Michigan's economy
Tuesday, May 31, 2011
In the beginning of the debate on Michigan's tax reform legislation, the political rhetoric quickly defined the discussion and obscured the full facts of the proposed reform. After reading the legislation carefully, and making sure I understood the facts, I did support modifying the original proposal and adopting it so we can move forward with getting Michigan back on its feet economically.
In the previous eight years, Michigan lost nearly a million jobs. As we began our work in January 2011, we all knew that getting our state's economy back on track would not be easy or painless. Some tough choices definitely lay ahead of us.
Tax reform is just one of several changes necessary to strengthen Michigan.
In the tax reform legislation, one of the highest profile issues because it concerns all Michigan families and especially our seniors, has been the proposal for pension tax reform.
Because it was changed from the original proposal, and because it was tough getting the facts out amidst the political rhetoric, I am sharing some of the details. The measure provides that:
- Social Security income will remain tax-free for retirees who live on a fixed income;
- Seniors turning 67 by Dec. 31, 2012, will not pay income tax on pension income;
- About 65 percent of retirees between ages 60 and 66 by Dec. 31, 2012 will pay no tax on pensions because private and public pensions will be exempt from taxes up to $20,000 annually for individuals and $40,000 for couples filing jointly;
- Income tax exemptions for Social Security, military pensions, active duty military pay, and disability benefits will continue;
- The Homestead Property Tax Credit for lower income households is preserved -- $41,000 income limit; less than $270,000 home value; and,
- The Michigan Earned Income Tax Credit is maintained at 6 percent of the federal credit to support those working to stay off government assistance.
As chair of the Senate's Seniors, Families and Human Services Committee, I am committed to making every effort to protect our seniors and ensure that they have the resources for the highest possible quality of life.
Making those goals possible means getting Michigan families the jobs they need to build a future in which pensions are a reality. We need a common-sense tax structure that encourages the creation of jobs, and a growing economy.
That's why another of the high visibility tax reforms -- changing the way business is taxed -- is so crucial. The Legislature approved replacing Michigan's current job-killing business tax with a simple, fair and efficient business tax of six percent on corporate income.
About 80 percent of all jobs created in the state are in businesses employing 100 or fewer workers. Tax reforms in the bill eliminate double-taxation for many small business owners, allowing them to file only one tax return instead of two; and close business tax loopholes to ensure fairness in the tax system for all job providers.
These changes move Michigan from 30th to 16th in the nation in business-friendly tax structure, improving our economic competitiveness nationwide and making us significantly more competitive among Great Lakes states.
Most important, the reforms provide all Michigan families with the potential for a stable future and will help make our state a great place to live, work and raise a family.
Sen. Judy Emmons represents the 33rd Senate District which includes Clinton, Ionia, Isabella and Montcalm counties.
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