Senator Colbeck Votes No on Pension Tax and Income Tax Rate Reduction Freeze

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(Lansing, MI) – Today State Senator Patrick Colbeck (R-Canton) voted no on HB 4361 because of his opposition to the bill’s expanded tax on pensions and provision to freeze the income tax rate reduction.

“While I support the repeal of the Michigan Business Tax, I oppose several other elements of the tax policy that passed the Senate today and voted no on the legislation,” Colbeck said.

“We are constitutionally required to balance the budget. In this context, it is important to note that the tax policy bone is connected to the appropriations bone. Despite the constitutional provisions and despite passing what, on paper each year is a balanced budget, we continue to exhibit a structural budget deficit year after year.

“There are two ways to fix this structural deficit – structural tax policy reform and/or structural spending policy reform.

“HB 4361 is a proposal for tax policy reform. This tax policy structural reform features two elements of concern: 1) removal of the pension tax exemptions, and 2) freezing of the income tax rate reduction at 4.35% despite a previous commitment to return to a 3.9% rate.

“The first of these elements, the removal of pension tax exemptions, is very likely to face constitutional challenges. These challenges hold the risk that the revenue projections forecast will not be realized. If the risk becomes a reality, we will have failed to balance the budget, thereby continuing our structural budget deficit.

“This risk would not be necessary if we were to employ additional vigor in the area of structural spending reform.

“My colleagues worked very hard on the tax policy structural reform and many difficult choices were made along the way. But now, more than ever, we need to make sure that our citizen’s tax dollars are used in the most efficient and effective manner possible. We need to improve accountability for how we spend each and every dollar.

“I look forward to working with my colleagues to enact sweeping structural reforms on the spending side of the ledger so that we can alleviate the tax burden on even more of Michigan’s citizens,” Colbeck concluded.

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