After bipartisan pressure, the Michigan state legislature modified its initial proposal from one which would completely eliminate the state’s 4.25-percent income tax to one that will gradually lower the tax to 3.9 percent over four years.
This change occurred after nine university presidents from public schools across the state, including Mark Schlissel, president of the University of Michigan, gathered Tuesday morning in front of the House chamber to lobby against the original proposal.
The university presidents were concerned the elimination of the income tax would lead to constraints in the state’s budget, potentially a gap of more than $1 billion in the first fiscal year and subsequently decrease university funding. The presidents cited concerns such as higher education inaccessibility and the rising cost of a college education as reasons for opposing the bill.
Schlissel expressed concern the tax cuts would prevent universities from providing higher education at a manageable cost for families across the state. He also said the proposal would negatively affect community infrastructure.
"Our fear is that if the resources available to state government are constrained by such a large tax cut, we won’t be able to maintain accessibility to a great higher education at the same cost now,” Schlissel said to the Detroit Free Press. “Families are already struggling to pay for college, and we don’t want to make those challenges greater. It's not just higher ed, it’s community colleges, it's schools, it’s infrastructure we’ve promised our fellow citizens we’re going to take care of. It’s the aid we return to our cities that allows them to provide services to our fellow citizens."
According to the Detroit Free Press, Gov. Rick Snyder had also expressed concern over the original tax plan and the loss of revenue, remarking that the situation should be researched more thoroughly.
"The governor is always open to new ideas and welcomes the discussion on tax reform," Anna Heaton, Snyder’s press secretary, told the Free Press. "For this particular proposal, there would need to be concrete data to demonstrate that there is adequate revenue from sources besides the income tax to ensure services for residents and investing in our statewide infrastructure would not be adversely affected."
In a press release following the announcement of the change Synder expressed his pleasure with the change.
"I appreciate that House leadership took seriously my concerns about the long-term impact of the proposal, but I still have a billion dollars worth of concerns because there has been no plan presented as to how this will affect residents and their communities statewide."
On Wednesday morning, the substituted bill will be voted on — less than a week after the committee’s hearing for the initial bill.
To reach the income tax level of 3.9 percent, the new bill, which will take effect Jan. 1, 2018, would reduce the income tax by 0.1 percent each year for three years — for the fourth year, it would be lowered by 0.05 percent.
State Rep. Yousef Rabhi (D–Ann Arbor) remarked that he thinks both the initial proposal and this new plan will negatively affect the state.
“I think that the Republican tax proposal and its amendment are both fiscally irresponsible to the state and the wrong move for us to make — it’s irresponsible to talk about cutting income to the state,” he said. “That’s hundreds of millions of dollars coming out of police and fire departments, coming out of schools.”