May 24, 2016, Introduced by Rep. Forlini and referred to the Committee on Appropriations.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 51 and 51d (MCL 206.51 and 206.51d), section
51 as amended by 2015 PA 180 and section 51d as added by 2015 PA
179.
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 and
after October 1, 2012, 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.
(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 and each October 1
thereafter, the state shall, from the revenue collected from the
tax levied under this section, reimburse the local governmental
units that levy taxes collected under the general property tax act,
1893 PA 206, MCL 211.1 to 211.155, for all revenue lost during that
fiscal year as a result of the homestead property tax exemption for
disabled veterans created under section 7b of the general property
tax act, 1893 PA 206, MCL 211.7b. The reimbursements described in
this subsection are subject to an appropriation as provided by law.
If the amount appropriated is less than the amount required for
payments to all local governmental units described in this
subsection, payments shall be prorated.
(4) (3)
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) (4)
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) (5)
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) (6)
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) (7)
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) (8)
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.
(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.
(d) "Taxable income" means taxable income as defined in this
part subject to the applicable source and attribution rules
contained in this part.
Sec.
51d. In addition to the distribution distributions under
section
51(2), 51, the following amounts of revenue collected from
the tax levied under section 51 shall be deposited into the state
treasury to the credit of the Michigan transportation fund created
in section 10 of 1951 PA 51, MCL 247.660, and disbursed as provided
in section 10(1)(k) of 1951 PA 51, MCL 247.660:
(a) Beginning October 1, 2018 through September 30, 2019,
$150,000,000.00.
(b) Beginning October 1, 2019 through September 30, 2020,
$325,000,000.00.
(c) Beginning October 1, 2020 and each October 1 thereafter,
$600,000,000.00.