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Rep. Albert: Tax relief, public pension debt reduction plans advancing in Michigan House
RELEASE|February 24, 2022

A plan to cut income taxes for all Michiganders is advancing in the state House, Appropriations Committee Chair Thomas Albert said today – along with a measure to help provide financial stability to debt-ridden government pension systems.

House Bills 5838 and 5054 were approved by the House Tax Policy Committee and House Appropriations Committee, respectively. The bills will advance to the House floor for further consideration.

“Inflation is at a 40-year high – the cost of everything from gas to groceries is skyrocketing, and it’s wrecking the budgets of Michigan workers, families and seniors,” Albert said. “People desperately need relief, and this plan provides it for everyone through lower income taxes. It’s a fair approach that will allow Michiganders to keep more of their hard-earned money for years to come.”

House Bill 5838 provides an estimated $1.7 billion in annual, ongoing tax relief. It starts with rolling back the income tax rate to 3.9 percent – down from the current 4.25 percent – for all individual payers of the Michigan income tax. This fulfills a pledge to taxpayers made roughly a decade ago, when the income tax rate was raised during difficult budget times.

Seniors would be in line for additional relief. The income exempted from taxes for those 62 and older would rise to $20,000 for individual filers and $40,000 for joint filers. An additional exemption would be applied specifically to retirement income – also at $20,000 for single filers and $40,000 for joint filers.

House Bill 5054 provides $1.5 billion in one-time funding to reduce debt and improve the finances of public employee retirement systems. Most of the funding would go to pension plans for local governments and road commissions, with an additional $350 million to improve financing in the Michigan State Police retirement system.

“Tax relief for seniors won’t do much good if their pensions run out of money – these reforms go hand-in-hand,” Albert said. “Debt related to government employee retirement systems is a cancer destroying local government finances across Michigan. We have a unique opportunity to improve local government finances over the long run by reducing debt, and that ultimately helps everyone – employees who are counting on the retirement benefits promised to them, and community members who rely on public services every day. And we would do this without asking our children and grandchildren to foot the bill for services they aren’t going to receive.”

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