Bill Text: MI SB0423 | 2019-2020 | 100th Legislature | Introduced
Bill Title: Individual income tax; rate; annual rollback of rate until zero; provide for. Amends sec. 51 of 1967 PA 281 (MCL 206.51).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2019-08-20 - Referred To Committee On Finance [SB0423 Detail]
Download: Michigan-2019-SB0423-Introduced.html
SENATE BILL No. 423
August 20, 2019, Introduced by Senator NESBITT and referred to the Committee on Finance.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending section 51 (MCL 206.51), as amended by 2018 PA 588.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 51. (1) For receiving, earning, or otherwise acquiring
income from any source whatsoever, there is levied and imposed
under this part upon the taxable income of every person other than
a corporation a tax at the following rates in the following
circumstances:
(a) On and after October 1, 2007 and before October 1, 2012,
4.35%.
(b)
Except as otherwise provided under subdivision (c), on On
and after October 1, 2012 and before January 1, 2020, 4.25%.
(c)
For Except as otherwise
provided under this subdivision,
beginning January 1, 2020 and each January 1 after 2020, the
maximum rate under this subsection shall be reduced by 0.1 each
year until the rate is zero. However, for each tax year beginning
on and after January 1, 2023, if the percentage increase in the
total general fund/general purpose revenue from the immediately
preceding fiscal year is greater than the inflation rate for the
same period and the inflation rate is positive, then the current
rate shall be reduced by an amount determined by multiplying that
rate by a fraction, the numerator of which is the difference
between the total general fund/general purpose revenue from the
immediately preceding state fiscal year and the capped general
fund/general purpose revenue and the denominator of which is the
total revenue collected from this part in the immediately preceding
state fiscal year or 0.1, whichever is greater. For purposes of
this subdivision only, the state treasurer, the director of the
senate fiscal agency, and the director of the house fiscal agency
shall determine whether the total revenue distributed to general
fund/general purpose revenue has increased as required under this
subdivision based on the comprehensive annual financial report
prepared and published by the department of technology, management,
and budget in accordance with section 23 of article IX of the state
constitution of 1963. The state treasurer, the director of the
senate fiscal agency, and the director of the house fiscal agency
shall make the determination under this subdivision no later than
the date of the January 2023 revenue estimating conference
conducted pursuant to sections 367a through 367f of the management
and budget act, 1984 PA 431, MCL 18.1367a to 18.1367f, and the date
of each January revenue estimating conference conducted each year
thereafter. As used in this subdivision:
(i) "Capped general fund/general purpose revenue" means the
total general fund/general purpose revenue from the 2020-2021 state
fiscal year multiplied by the sum of 1 plus the product of 1.425
times the difference between a fraction, the numerator of which is
the consumer price index for the state fiscal year ending in the
tax year prior to the tax year for which the adjustment is being
made and the denominator of which is the Consumer Price Index for
the 2020-2021 state fiscal year, and 1.
(ii) "Total general fund/general purpose revenue" means the
total general fund/general purpose revenue and other financing
sources as published in the comprehensive annual financial report
schedule of revenue and other financing sources – general fund for
that fiscal year plus any distribution made pursuant to section
51d.
(2) Beginning January 1, 2000 and through November 30, 2018,
that percentage of the gross collections before refunds from the
tax levied under this section that is equal to 1.012% divided by
the income tax rate levied under this section shall be deposited in
the state school aid fund created in section 11 of article IX of
the state constitution of 1963. Except as otherwise provided under
this subsection, beginning December 1, 2018 and each state fiscal
year thereafter, that percentage of the gross collections before
refunds from the tax levied under this section that is equal to
0.954% divided by the income tax rate levied under this section
shall be deposited in the state school aid fund created in section
11 of article IX of the state constitution of 1963. However, if, in
any 1 of the 2018-2019 through the 2021-2022 state fiscal years,
the minimum foundation allowance falls below the 2017-2018 minimum
foundation allowance established under section 20 of the state
school aid act of 1979, 1979 PA 94, MCL 388.1620, then for that
fiscal year that percentage of the gross collections before refunds
from the tax levied under this section that is equal to 1.012%
divided by the income tax rate levied under this section shall be
deposited in the state school aid fund created in section 11 of
article IX of the state constitution of 1963.
(3) In addition to the distributions under subsections (2) and
(4) and sections 51d, 51e, and 51f, beginning October 1, 2016, from
the revenue collected under this section an amount equal to 3.5% of
the average amount of farmland tax credits claimed under section
36109 of the natural resources and environmental protection act,
1994 PA 451, MCL 324.36109, for the immediately preceding 3 state
fiscal years shall be deposited into the agricultural preservation
fund created in section 36202 of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.36202.
(4) In addition to the distributions under subsections (2) and
(3) and sections 51d, 51e, and 51f, and subject to the limitation
under this subsection, beginning with the 2018-2019 state fiscal
year and each fiscal year thereafter, from the revenue collected
under this section $69,000,000.00 shall be deposited into the renew
Michigan fund created in section 51g. However, if, in any 1 of the
2018-2019 through the 2021-2022 state fiscal years, the minimum
foundation allowance falls below the 2017-2018 minimum foundation
allowance as provided in section 51(2) then no money shall be
deposited into the renew Michigan fund pursuant to this subsection
for that fiscal year.
(5) The department shall annualize rates provided in
subsection (1) as necessary. The applicable annualized rate shall
be imposed upon the taxable income of every person other than a
corporation for those tax years.
(6) The taxable income of a nonresident shall be computed in
the same manner that the taxable income of a resident is computed,
subject to the allocation and apportionment provisions of this
part.
(7) A resident beneficiary of a trust whose taxable income
includes all or part of an accumulation distribution by a trust, as
defined in section 665 of the internal revenue code, shall be
allowed a credit against the tax otherwise due under this part. The
credit shall be all or a proportionate part of any tax paid by the
trust under this part for any preceding taxable year that would not
have been payable if the trust had in fact made distribution to its
beneficiaries at the times and in the amounts specified in section
666 of the internal revenue code. The credit shall not reduce the
tax otherwise due from the beneficiary to an amount less than would
have been due if the accumulation distribution were excluded from
taxable income.
(8) The taxable income of a resident who is required to
include income from a trust in his or her federal income tax return
under the provisions of 26 USC 671 to 679, shall include items of
income and deductions from the trust in taxable income to the
extent required by this part with respect to property owned
outright.
(9) It is the intention of this section that the income
subject to tax of every person other than corporations shall be
computed in like manner and be the same as provided in the internal
revenue code subject to adjustments specifically provided for in
this part.
(10) As used in this section:
(a) "Consumer Price Index" means the United States Consumer
Price Index for all urban consumers as defined and reported by the
United States Department of Labor, Bureau of Labor Statistics.
(b) "Inflation rate" means the annual percentage change in the
Consumer Price Index, as determined by the department, comparing
the 2 most recent completed state fiscal years.
(c) "Person other than a corporation" means a resident or
nonresident individual or any of the following:
(i) A partner in a partnership as defined in the internal
revenue code.
(ii) A beneficiary of an estate or a trust as defined in the
internal revenue code.
(iii) An estate or trust as defined in the internal revenue
code.
(d) "Taxable income" means taxable income as defined in this
part subject to the applicable source and attribution rules
contained in this part.
