Michigan AG fights lawsuit over income tax break duration



(The Center Square) – Michigan Attorney General Dana Nessel moved to dismiss an August lawsuit arguing the state’s income tax drop from 4.25% to 4.05% should be permanent.

The Mackinac Center for Public Policy sued State Treasurer Rachael Eubanks over an interpretation of a 2015 law requiring the individual income tax rate to decrease automatically if year-over-year state general fund revenues increase at a greater rate than inflation.

The group represents the Associated Builders and Contractors of Michigan, National Federation of Independent Business, Inc., Sen. Ed McBroom, Rep. Dale Zorn and six individual taxpayers.

Patrick J. Wright, vice president for legal affairs at the MCPP, said the change was an “illegal tax hike.”

“The motion argues that only the Legislature can fix the Attorney General’s misinterpretation of the law,” Wright said in a statement. “This is fundamentally wrong. It is the province and duty of the courts to interpret the law. Further, the Attorney General largely abandons her own opinion and instead raises procedural hurdles in an attempt to insulate the illegal tax hike from review. We look forward to responding to the motion.”

In March, Nessel issued an opinion saying the income tax reduction will only apply this year. Nessel wrote the triggering event is based on temporary circumstances that are reviewed annually.

“Essentially, the Legislature has determined that if a situation exists where a percentage increase in state revenue in the immediately preceding fiscal year is greater than the rate of inflation for that same year and the inflation rate is positive, then the State can afford to provide relief to taxpayers,” Nessel wrote.

She summarized: “Simply put, the statute provides temporary relief based on temporary circumstances.”

However, the nonpartisan House Fiscal Agency’s 2015 bill analysis said the reductions would “continue indefinitely on an annual basis.”



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