Republicans in the state Senate are poised today to approve changes to Michigan’s tax structure, including tax cuts for corporations and new taxes on pensions.
It all depends if the Senate Committee on Reforms, Restructuring and Reinventing reaches an agreement and discharges the tax legislation.
It recessed Wednesday without doing so, leaving senators in limbo as to what they may actually wind up voting for — or against.
“The sausage-making process continues,” said Sen. Mike Kowall, R-White Lake, Wednesday afternoon. Kowall sits on that committee.
“I think it’ll be discharged from committee tomorrow,” Kowall said. “The real process is going to begin when it goes to conference committee — if it has the votes to get there.”
Kowall said he probably could support what the House sent over to the Senate — which included scaled back taxes on pensions from the blanket tax on pensions Gov. Rick Snyder first proposed.
The House-passed version kept some exemptions for the oldest pensioners.
But senators weren’t sure Wednesday what a final tax on pensions will look like until the Senate committee gets done. The same legislation also includes elimination of the Michigan Business Tax and a new 6 percent tax on profits.
Sen. David Robertson, R-Grand Blanc Township, also represents the Oakland County communities of Waterford, Springfield, Groveland and Brandon Townships.
He also sits on the Reforms, Restructuring and Reinventing committee with Kowall.
“I absolutely, vigorously support the governor’s tax cut for business,” Robertson said. “It is absolutely essential.
“I’m just as vigorously opposed to increasing taxes on pensions. What I’ve been arguing for months is separation of those issues. I’m still hopeful that they might be.”
Sen. John Pappageorge, R-Troy, said the aging baby boomer population makes taxing pension income a necessity.
“The problem is we will not be able to afford the baby boomers if they’re out there for 20 or 30 years getting all kinds of services and not making any kind of contribution,” he said. “I don’t think people are paying attention to the long-term problem. You cannot excuse a whole bunch of people from being part of the solution.
“It’s not the problem we have today; it’s the problem we’ll have in the future if we don’t do something today,” he said.
Under the proposal sent over from the House, people older than 67 would not have their pensions taxed while people ages 61 to 67 would have $60,000 of their income exempt.
Under a scenario where there’s $70,000 income, of which $20,000 is Social Security and with a $60,000 exemption, those people ages 61 to 67 would pay $435 in taxes on income of $10,000.
Pappageorge said he had no prediction what the Senate would produce today.
Sen. Jim Marleau, R-Lake Orion, was not immediately available for comment.
The Republican majority in the Legislature is hustling to complete a budget by the end of the month that’s in line with Snyder’s ideas of reinventing Michigan.
But they’ve been met with active protests that Republicans are giving corporations big tax breaks at the expense of public education, seniors and the disadvantaged.
In general, Democrats have lined up against Snyder’s proposals, but their clout is minimal in the Legislature because of the Republican majority.
Sen. Vince Gregory, D-Southfield, remains opposed to a tax on pensions.
“I would say that from the number of calls and emails we’ve gotten to the office, probably 90 percent are opposed,” Gregory said. “As a representative of the people, I hear what they’re saying.”
Gregory suggested that another option floating around is to charge a lower tax on businesses but broaden it to include all businesses, not just corporations.
“There’s some talk of taxing all businesses at a much lower rate at 2 or 3 percent, which would balance the budget, and then we would not have to tax seniors or retirement money,” Gregory said.
Taxing pensions is a difficult policy issue in general and an even touchier political issue for Republicans who would later have to justify approving tax increases since they control both chambers of the Legislature.
Lawmakers are certainly under some pressure.
The liberal Lansing-based Progress Michigan along with the We Are The People coalition announced a new website Wednesday called IMakeMichiganWork.org.
The site posts videos of people talking about how vital their work is to the state.
The Capitol in Lansing has also been the venue for numerous protests during the state’s budget process.
Besides the tax changes, the House and Senate also have to reconcile their differences on spending bills for state government and for education.
Amber McCann, spokeswoman for Senate Majority Leader Randy Richardville, R-Monroe, said that 16 conference committees will iron out those differences for each of the 16 spending bills before wrapping them into two bills for a final vote, one on general fund spending and the other on spending for education.
Contact Charles Crumm at 248-745-4649, firstname.lastname@example.org or follow him on Twitter @crummc and on Facebook.