Genesee News

State Representative David Martin has unveiled a plan aimed at boosting economic growth and offering relief to the people of Michigan. The proposal involves reducing the state income tax rate for families and small businesses, providing them with much-needed financial respite.

The state income tax rate recently increased from 4.05% to 4.25% due to actions taken by Lansing Democrats. This change reversed the reduction that had been implemented in 2023, following a law passed by Republicans in 2015. Rep. Martin's plan seeks to immediately lower the state income tax rate even further to 3.9% in order to ease the burden on struggling families grappling with the high cost of living.

In explaining the rationale behind his proposal, Rep. Martin, a Republican from Davison, emphasized the potential positive impact on the state's economy. He stated, "Lowering Michigan's income tax to 3.9% is a step toward a brighter future for our state. It's about giving families a break while boosting our state economy. Jobs are flourishing where taxes are under 4%, and that's where we should aim to be. My plan will give struggling families some breathing room and fuel Michigan's growth."

Rep. Martin's plan also fulfills a previous commitment to restore the income tax rate to 3.9%, as it was during Governor Jennifer Granholm's administration. In 2007, as part of a legislative agreement to avoid a government shutdown, the state income tax rate was temporarily increased from 3.9% to 4.35%. The understanding at the time was that the rate would revert to 3.9% by 2015, but this promise was not upheld. The rate was subsequently reduced to 4.25% in 2012 and temporarily dropped to 4.05% in 2023. However, Lansing Democrats successfully pushed for taxes to be raised again in 2024.

Support for Rep. Martin's proposal is grounded in data compiled by the Mackinac Center for Public Policy. The research reveals that states with income tax rates below 4% have experienced a 5.7% increase in job numbers compared to pre-pandemic levels. In contrast, states with income tax rates of 4% or higher have only seen a 2% increase in job numbers since the pandemic. Michigan, unfortunately, lags even further behind, with job numbers still 0.6% below pre-pandemic levels, according to the Bureau of Labor Statistics' latest payroll jobs data.

Rep. Martin argues that reducing the income tax should be viewed as an investment in Michigan's workforce. He explains, "Lower taxes mean more spending power for families, circulating money back into our local businesses and fueling job creation. It also attracts businesses looking for a friendly environment, spurring job creation and setting the stage for sustained economic growth."

Despite evidence indicating that lower taxes could boost job growth, Governor Whitmer continues to advocate for higher taxes. She is using her population council to make the case for this approach, even as state budget experts have announced higher-than-expected revenue, suggesting that a tax cut is feasible.

Rep. Martin's plan, known as House Bill 5399, has been referred to the House Government Operations Committee. It remains to be seen how the proposal will progress through the legislative process, but its focus on tax relief and economic growth has already garnered attention and support.