The Mackinac Center for Public Policy filed a lawsuit Thursday on behalf of a coalition of groups, individuals, and lawmakers against the state treasurer, seeking to ensure Michigan preserves the income tax cut that took effect this year.
Lawmakers passed legislation in 2015 incorporating an income tax reduction trigger lowering the current rate when the state’s revenue outpaces inflation by a set amount. Last year’s state revenue was high enough to trigger a rollback of the rate from 4.25% to 4.05%. The lawsuit seeks to stop the state treasurer from raising the income tax next year. If successful, the lawsuit will prevent an annual tax hike of around $700 million.
Michigan Attorney General Dana Nessel issued an opinion in March stating the income tax reduction will only apply this year. According to the Mackinac Center, when the law was passed, there was a clear consensus from politicians on both sides of the aisle and the media that the rate reduction would be permanent. The House Fiscal Agency’s 2015 analysis of the bill stated that the reductions would “continue indefinitely on an annual basis.”