Advocacy News – June 24, 2021
Since 2018, the Michigan Chamber has led the charge on an effort that will create $190 million in tax savings for Michigan businesses. After being vetoed by Governor Snyder in 2018, the Chamber kept up the fight and similar legislation to what Governor Snyder vetoed is now on Governor Whitmer’s desk. We are hopeful she signs the bill, which will provide much-needed tax relief to “pass-through” businesses or businesses whose profits pass through to the owner, where they pay individual income tax on those profits.
Pass-though businesses are businesses organized as partnerships, LLCs and S-Corporations. These businesses have been subject to a $10,000 cap on how much state and local taxes (SALT) can be deducted from personal income. If one considers the amount of property taxes paid on the business alone, you can see how this cap really limits how much SALT can be deducted.
HB 4288, which passed with overwhelming bipartisan support in both the House and Senate, will allow a taxpayer to avoid the $10,000 cap and fully deduct all SALT saving Michigan businesses $190 million per year. If Governor Snyder had not vetoed similar legislation, taxpayers would have saved nearly $600 million dollars up to this point.
The legislation does NOT reduce state revenue, as the savings are all realized through the federal tax code. State tax policy had to be altered, to allow taxpayers the ability to realize these significant savings in federal tax liability.
The policy contained in HB 4288 is a no-brainer and we will continue to encourage Governor Whitmer to do the right thing and sign this top Michigan Chamber priority.
We will keep you up-to-date on the Governor’s actions and if there are any questions on this legislation, please contact Dan Papineau at dpapineau@michamber.com.