House Democrats announce 6-bill legislative package to provide middle-class tax relief

State lawmakers from Washtenaw County joined with fellow House Democrats on Monday to announce a new plan for middle-class tax relief in Michigan.

A package of six bills, House Bills 4561-4566, are focused on restoring tax credits and deductions to middle-class families and repealing taxes on retiree pensions. Legislation included in the plan would relieve the tax burden on Michigan families when next year's tax season rolls around, Democrats say.

"Many residents are now feeling the full effects of the tax changes that took effect last year. It means families and seniors have to make do with less," said state Rep. Gretchen Driskell, D-Saline. "The legislation we're talking about today would ease the tax burden on Michiganders to ease their struggles."

Last session, the Republican-controlled state Legislature made several changes to Michigan's tax code, imposing a tax on retirement income, eliminating the Homestead Property Tax Credit for many families, cutting the Earned Income Tax Credit and eliminating a $600 per-child deduction and tax credits for charitable donations. Democrats argue those changes have hurt middle-class families and seniors and were needed only to help offset $1.8 billion in tax breaks for businesses.

The new taxes took effect in 2012, and many taxpayers became aware of them for the first time as they filed their state income taxes this year.

"People across Michigan are seeing reduced refunds or actually have to submit a payment, while corporations are paying much less than they used to," said state Rep. Jeff Irwin, D-Ann Arbor. "This tax shift hasn't helped create jobs, so we need to reverse it and put that money back where it'll do the most good — into the pockets of middle-class families."

Gov. Rick Snyder has defended the tax reforms, saying a right-sizing of business and personal taxes was overdue when he took office and Michigan's tax system is now fairer and more efficient.

He also has said there no doubt would be some short-term pain felt, but the result is a state budget that is fiscally sound, and that's going to be attractive to businesses.

The House Democrats' bill package, which they're calling Michigan's Middle-Class Plan, includes repealing the new tax on retirement income, restoring the Earned Income Tax Credit to 11 percent in the first year, requiring employers to inform employees about the Earned Income Tax Credit, restoring the Homestead Property Tax Credit and restoring the child deduction. Another bill would ban the tax deduction for expenses incurred by moving a business out of state.

"The economy is starting to turn around, but we can't afford to derail that recovery by putting a bigger tax burden onto families and seniors," said state Rep. David Rutledge, D-Superior Township. "We will work to protect hard-working Michiganders from arbitrary increases in taxes that do nothing to invest in the programs and systems that could make their lives better."

State Rep. Adam Zemke, D-Ann Arbor, said putting money back into the pockets of middle-class families means more can be spent at local businesses, which he called a win-win situation.

MLive reported House Republicans have criticized Democrats for basing their budget priorities around a series of unrealistic revenue sources.

"The Democrats claim they want to cut taxes one day and raise spending the next," said Ari Adler, a spokesperson for House Republicans. "That results in unbalanced budgeting that can only be called leadership if you live in fantasy land."

Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's email newsletters.