Michigan House votes to eliminate several tax exemptions, budget deadline looms

By: The Associated Press
By: The Associated Press

House Democrats tonight finished voting to eliminate more than 500 million dollars in annual tax exemptions for businesses as part of a proposed solution to the state's budget crisis.

Democrats who hold the majority in the House typically voted in favor of the multi-bill package. Republicans opposed the package.

The bills now go to the Senate, where Republicans hold the majority and are likely to be less receptive to the proposals.

Some similar proposals passed by the House in April have not been taken up by the Senate.

House Democrats said they are offering the proposals as part of a possible solution to a projected 1.75 billion dollar deficit in the fiscal year that starts October 1st.

The state faces a potential partial shutdown of government services unless lawmakers figure out a way to eliminate the deficit or pass a temporary extension of the current budget this week.

A key step will be determining how much of a projected 1.75 billion dollar deficit for the fiscal year that begins next week should be erased through a higher personal income tax rate.

A joint panel of Senate and House members was expected to begin negotiating that touchy subject as early as Tuesday. The Legislature could be asked to vote on whatever compromise they reach within a few days.

The current income tax rate is 3.9 percent. Many Democrats want to set the rate at 4.6 or higher, while Republicans appear to have topped out at voting on a proposal to raise the rate to 4.3 percent.

Groups across Michigan's political spectrum are calling for compromise to settle the state budget situation.


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