SENATE BILL No. 1352

May 22, 2002, Introduced by Senators SCHWARZ, GAST and GOUGEON and referred to the

Committee on Finance.

A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

by amending section 51 (MCL 206.51), as amended by 1999 PA 6; and

to repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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

2 income from any source whatsoever, there is levied and imposed

3 upon the taxable income of every person other than a corporation

4 a tax at the following rates in the following circumstances:

5 (a) Before May 1, 1994, 4.6%.

6 (b) After April 30, 1994 and before January 1, 2000, 4.4%.

7 (c) For tax years that begin on and after January 1, 2000

8 and before January 1, 2002 and on and after January 1, 2003, the

9 rate under section 51b, 51c, 51d, or 51e, as applicable JANUARY

10 1, 2004, 4.2%.

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1 (d) For tax years that begin on and after January 1, 2002

2 2004 and before January 1, 2003 2005, 4.1%.

3 (E) FOR TAX YEARS THAT BEGIN ON AND AFTER JANUARY 1, 2005

4 AND BEFORE JANUARY 1, 2006, 4.0%.

5 (F) FOR TAX YEARS THAT BEGIN ON AND AFTER JANUARY 1, 2006,

6 3.9%.

7 (2) The following percentages of the net revenues collected

8 under this section and sections 51b, 51c, 51d, and 51e shall be

9 deposited in the state school aid fund created in section 11 of

10 article IX of the state constitution of 1963:

11 (a) Beginning October 1, 1994 and before October 1, 1996,

12 14.4% of the gross collections before refunds from the tax levied

13 under this section.

14 (b) After September 30, 1996 and before January 1, 2000,

15 23.0% of the gross collections before refunds from the tax levied

16 under this section.

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

18 collections before refunds from the tax levied under this section

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

20 under this section. or section 51b, 51c, 51d, or 51e, as

21 applicable.

22 (3) The department shall annualize rates provided in subsec-

23 tion (1) as necessary for tax years that end after April 30,

24 1994. The applicable annualized rate shall be imposed upon the

25 taxable income of every person other than a corporation for those

26 tax years.

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

2 the same manner that the taxable income of a resident is

3 computed, subject to the allocation and apportionment provisions

4 of this act.

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

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

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

8 allowed a credit against the tax otherwise due under this act.

9 The credit shall be all or a proportionate part of any tax paid

10 by the trust under this act for any preceding taxable year that

11 would not have been payable if the trust had in fact made distri-

12 bution to its beneficiaries at the times and in the amounts spec-

13 ified in section 666 of the internal revenue code. The credit

14 shall not reduce the tax otherwise due from the beneficiary to an

15 amount less than would have been due if the accumulation distri-

16 bution were excluded from taxable income.

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

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

19 return under the provisions of subpart E of part I of subchapter

20 J of chapter 1 of the internal revenue code, 26 U.S.C. 671 to

21 679, shall include items of income and deductions from the trust

22 in taxable income to the extent required by this act with respect

23 to property owned outright.

24 (7) It is the intention of this section that the income

25 subject to tax of every person other than corporations shall be

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

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1 internal revenue code subject to adjustments specifically

2 provided for in this act.

3 (8) As used in this section: and sections 51b, 51c, 51d,

4 and 51e:

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

6 nonresident individual or any of the following:

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

8 revenue code.

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

10 internal revenue code.

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

12 code.

13 (b) "Taxable income" means taxable income as defined in this

14 act subject to the applicable source and attribution rules con-

15 tained in this act.

16 Enacting section 1. Sections 51c, 51d, and 51e of the

17 income tax act of 1967, 1967 PA 281, MCL 206.51c, 206.51d, and

18 206.51e, are repealed effective January 1, 2002.

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