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House OKs Income Tax Rate To 3.9 Percent By 2018

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LANSING (AP) - Legislation that would lower the state’s income tax rate to 3.9 percent by 2018 was approved Thursday by the Michigan House, though the Senate likely won’t take it up until later this year as the two chambers wind down for a summer break.

The bill, passed by a 97-13 vote, would drop to 4.2 percent on Jan. 1 and go down each year. The House Fiscal Agency said next fiscal year’s annual revenue loss is estimated to be $75.2 million, which will grow to about $800 million in 2018.

Bill sponsor Nancy Jenkins, R-Clayton, said she expects there will be sufficient money to cover the cost of the tax rollback.

“This bill is based on expected revenue and will not lead to program cuts or shifted funds,” she said.

When the cut is in full effect, she said, a family of four making $50,000 a year would save $700.

Lawmakers recently passed legislation that cut the current income tax rate from 4.35 percent to 4.25 percent on Oct. 1, three months earlier than scheduled. That will save average taxpayers about $10 per person.

Although most Democrats voted for the tax cut Thursday, several opposed it.

“This makes no sense in terms of creating a stable funding source for necessary programs,” said Vicki Barnett, D-Farmington Hills, who cast a “no” vote. “I would like to join you in the fun and games. I was elected … not to pander for political gain in an election year.”

Some Democrats supported making the entire tax effective this year, arguing that it could have been calculated the upcoming fiscal year’s budget.

Changes approved last year by Republican Gov. Rick Snyder and the GOP-led Legislature mean individual income taxpayers will pay $1.4 billion more next year, based on 2012 income, while businesses will pay $1.7 billion less.

© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

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