Gov. Rick Snyder wants to use some of the state’s budget “surplus” (higher-than-anticipated revenues) to restore a portion of the Homestead Property Tax Credit that was cut in 2011.
The governor reduced the HPTC starting in Tax Year 2012, eliminating the credit for 362,000 Michigan families. He now wants to restore the credit to about 100,000 of those families.
This will help struggling families and seniors make ends meet and boost local businesses. The governor’s plan is a far better alternative to income tax reduction proposals that would disproportionately benefit high-income households.
A new fact sheet from the League looks at the impact from the reduction in the homestead credit and explains the proposed changes. The credit fell from an average of $529 to 1.5 million taxpayers in 2011 to an average of $481 to 1.1 million taxpayers in 2012.
The HPTC is the state’s largest refundable income tax credit and is available to those who pay high property taxes or rent in relation to their income. Even when compared with the state’s Earned Income Tax Credit, the HPTC is more than twice as large in terms of total refunded dollars.
The cuts in 2011 have prepared many low-income families for the worst.
But the state’s $1 billion dollars in unexpected revenues over three years had many hoping for the best.
And so did the governor’s State of the State address: “I believe there is going to be some opportunity for tax relief [for those] who wake up every day and pack their lunch to go to work.”
And while some in the Legislature would like to see that tax relief take the form of an income tax rollback, such a move would be negligible to the state’s economic recovery.
Here’s why: If you own a business and have an unexpected surplus, you reinvest that money into your business in order to improve your outcomes.
And that’s just what the HPTC expansion would do for the state’s economy by reinvesting in Michigan’s workers and their families.
– Jason Escareno