HOUSE BILL No. 4001

 

 

January 11, 2017, Introduced by Rep. Chatfield and referred to the Committee on Tax Policy.

 

A bill to amend 1967 PA 281, entitled

 

"Income tax act of 1967,"

 

by amending section 51 (MCL 206.51), as amended by 2016 PA 266.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

Sec. 51. (1) For receiving, earning, or otherwise acquiring

 

income from any source whatsoever, there is levied and imposed

 

under this part upon the taxable income of every person other than

 

a corporation a tax at the following rates in the following

 

circumstances:

 

(a) On and after October 1, 2007 and before October 1, 2012,

 

4.35%.

 

(b) Except as otherwise provided under subdivision (c), on On

 

and after October 1, 2012 and before January 1, 2018, 4.25%.

 


(c) For each tax year beginning on and after January 1, 2023,

 

if the percentage increase in the total general fund/general

 

purpose revenue from the immediately preceding fiscal year is

 

greater than the inflation rate for the same period and the

 

inflation rate is positive, then the current rate shall be reduced

 

by an amount determined by multiplying that rate by a fraction, the

 

numerator of which is the difference between the total general

 

fund/general purpose revenue from the immediately preceding state

 

fiscal year and the capped general fund/general purpose revenue and

 

the denominator of which is the total revenue collected from this

 

part in the immediately preceding state fiscal year. For purposes

 

of this subdivision only, the state treasurer, the director of the

 

senate fiscal agency, and the director of the house fiscal agency

 

shall determine whether the total revenue distributed to general

 

fund/general purpose revenue has increased as required under this

 

subdivision based on the comprehensive annual financial report

 

prepared and published by the department of technology, management,

 

and budget in accordance with section 23 of article IX of the state

 

constitution of 1963. The state treasurer, the director of the

 

senate fiscal agency, and the director of the house fiscal agency

 

shall make the determination under this subdivision no later than

 

the date of the January 2023 revenue estimating conference

 

conducted pursuant to sections 367a through 367f of the management

 

and budget act, 1984 PA 431, MCL 18.1367a to 18.1367f, and the date

 

of each January revenue estimating conference conducted each year

 

thereafter. As used in this subdivision:

 

(i) "Capped general fund/general purpose revenue" means the


total general fund/general purpose revenue from the 2020-2021 state

 

fiscal year multiplied by the sum of 1 plus the product of 1.425

 

times the difference between a fraction, the numerator of which is

 

the consumer price index for the state fiscal year ending in the

 

tax year prior to the tax year for which the adjustment is being

 

made and the denominator of which is the consumer price index for

 

the 2020-2021 state fiscal year, and 1.

 

(ii) "Total general fund/general purpose revenue" means the

 

total general fund/general purpose revenue and other financing

 

sources as published in the comprehensive annual financial report

 

schedule of revenue and other financing sources general fund for

 

that fiscal year plus any distribution made pursuant to section

 

51d.

 

(c) Beginning January 1, 2018 through December 31, 2018, 3.9%.

 

(d) Beginning January 1, 2019 and each January 1 after 2019,

 

the maximum rate under this subsection shall be reduced by 0.1 each

 

year until the rate is zero.

 

(2) Beginning January 1, 2000, that percentage of the gross

 

collections before refunds from the tax levied under this section

 

that is equal to 1.012% divided by the income tax rate levied under

 

this section shall be deposited in the state school aid fund

 

created in section 11 of article IX of the state constitution of

 

1963.

 

(3) In addition to the distribution under subsection (2) and

 

section 51d, beginning October 1, 2016, from the revenue collected

 

under this section an amount equal to 3.5% of the average amount of

 

farmland tax credits claimed under section 36109 of the natural


resources and environmental protection act, 1994 PA 451, MCL

 

324.36109, for the immediately preceding 3 state fiscal years shall

 

be deposited into the agricultural preservation fund created in

 

section 36202 of the natural resources and environmental protection

 

act, 1994 PA 451, MCL 324.36202.

 

(4) The department shall annualize rates provided in

 

subsection (1) as necessary. The applicable annualized rate shall

 

be imposed upon the taxable income of every person other than a

 

corporation for those tax years.

 

(5) The taxable income of a nonresident shall be computed in

 

the same manner that the taxable income of a resident is computed,

 

subject to the allocation and apportionment provisions of this

 

part.

 

(6) A resident beneficiary of a trust whose taxable income

 

includes all or part of an accumulation distribution by a trust, as

 

defined in section 665 of the internal revenue code, shall be

 

allowed a credit against the tax otherwise due under this part. The

 

credit shall be all or a proportionate part of any tax paid by the

 

trust under this part for any preceding taxable year that would not

 

have been payable if the trust had in fact made distribution to its

 

beneficiaries at the times and in the amounts specified in section

 

666 of the internal revenue code. The credit shall not reduce the

 

tax otherwise due from the beneficiary to an amount less than would

 

have been due if the accumulation distribution were excluded from

 

taxable income.

 

(7) The taxable income of a resident who is required to

 

include income from a trust in his or her federal income tax return


under the provisions of 26 USC 671 to 679, shall include items of

 

income and deductions from the trust in taxable income to the

 

extent required by this part with respect to property owned

 

outright.

 

(8) It is the intention of this section that the income

 

subject to tax of every person other than corporations shall be

 

computed in like manner and be the same as provided in the internal

 

revenue code subject to adjustments specifically provided for in

 

this part.

 

(9) As used in this section:

 

(a) "Consumer price index" means the United States consumer

 

price index for all urban consumers as defined and reported by the

 

United States Department of Labor, Bureau of Labor Statistics.

 

(b) "Inflation rate" means the annual percentage change in the

 

consumer price index, as determined by the department, comparing

 

the 2 most recent completed state fiscal years.

 

(a) (c) "Person other than a corporation" means a resident or

 

nonresident individual or any of the following:

 

(i) A partner in a partnership as defined in the internal

 

revenue code.

 

(ii) A beneficiary of an estate or a trust as defined in the

 

internal revenue code.

 

(iii) An estate or trust as defined in the internal revenue

 

code.

 

(b) (d) "Taxable income" means taxable income as defined in

 

this part subject to the applicable source and attribution rules

 

contained in this part.