News Story

Michigan Senators: Factor $700M tax cut into 2025 budget

Mackinac Center lawsuit will soon have its day in appeals court

Two Republican senators are urging Gov. Gretchen Whitmer to account for the possibility of a $700 million tax cut in Michigan’s 2025 budget.

Senate Republican Leader Aric Nesbitt, R-Porter Township, and Appropriations Committee Vice Chair Jon Bumstead, R-North Muskegon, penned a Feb. 20 letter to Whitmer.

“As you are aware, a lawsuit challenging your $700 million income tax increase is currently pending before the Michigan Court of Appeals and will be decided by March 11,” Nesbitt and Bumstead wrote. “Additionally, any appeal to that decision would be due to the Michigan Supreme Court by March 25, 2024.”

The Mackinac Center for Public Policy filed the lawsuit last year, and the case is active.

At issue is $700 million, and the difference between the 4.25% income tax rate Whitmer wants and a 4.05% income tax rate that is triggered by a 2015 law if the budget and the economy meets certain conditions.

Those conditions were met ahead of 2023 tax season. Whitmer attempted budgetary maneuvers to avoid the trigger. When that failed, a member of Whitmer’s cabinet, Michigan Treasurer Rachael Eubanks, sought an Attorney General’s opinion on when the trigger applied.

Attorney General Dana Nessel fulfilled the request the very next day. She sided with the Whitmer administration in viewing the tax cut as event-driven, applicable only in years when conditions are met.

The Mackinac Center suit argues that the tax cut is permanent. Sen. Ed McBroom, R-Waucedah Township, and Rep. Dale Zorn, R-Onstead, joined the lawsuit. McBroom and Zorn were lawmakers in 2015 when the law in question was enacted.

“If the courts were to provide a favorable ruling for the people of our great state by protecting families and small businesses from an income tax increase, the budget you presented this month would be out of balance,” Nesbitt and Bumstead warn.

The letter is copied in full below.


Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.