Snyder's Compromise Tax Proposal Could Soon See House Vote

LANSING (WWJ/AP) - The state house could vote as early as Thursday on a compromise tax proposal from Governor Rick Snyder. Key elements of the plan have moved out of committee including the elimination of the Michigan Business Tax in favor of a new 6-percent corporate tax.

Republicans say the reform plan will help spur job growth. "There is an urgency here to make sure that we do what we need to do, make the difficult decisions that we need to make to reform our state to turn this state around. And we are moving very quickly because the times are urgent," says House Speaker Jase Bolger.
Republican legislative leaders have not guaranteed the compromise plan will pass, although the GOP has majorities in both the House and Senate. There are lingering concerns about aspects of the proposal, including measures related to ending or restricting tax exemptions for some seniors.
The governor has significantly scaled down his original pension tax proposal, which would have raised an estimated $900 million by ending exemptions for most retirement income. Snyder's revised plan calls for raising about $300 million through retiree income tax changes. Those 67 and older as of Jan. 1, 2012 would continue to get the same tax breaks they get now, while taxes would apply to some retirement income for those ages 60 to 66. Income from Social Security and military pensions would remain exempt.

The proposals are critical to Snyder's overall state budget plan for the fiscal year that starts Oct. 1. In addition to the tax changes, Snyder wants to cut education spending and make deeper reductions to many other programs to eliminate a projected budget hole of roughly $1.4 billion.

Democrats consider the plan a tax shift, giving businesses breaks at the expense of seniors and low-income families while hurting schools and other services.

(The Associated Press contributed to this report)