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Governor Granholm succeeded in pushing through a tax increase to resolve the state budget deficit. This is first time the Governor and legislature raised a Michigan tax in more than a decade.
According to the Associated Press: “The House voted 64-46 to approve the bill that would drop the income tax from 4 percent to 3.9 percent on July 1 instead of Jan. 1. Voting "yes" were 17 Republicans and all 47 Democrats. Voting "no" were 46 Republicans…The deal is similar to an agreement reached between the Democratic governor and Sikkema, which included $379.8 million in cuts, a businesses tax cut, the six-month delay in the income tax cut, a one-month delay in the date Merit Scholarships are paid and about $86 million from extra revenue…But the new deal includes more spending reductions and a larger tax cut for businesses; both were demanded by Republicans who control the House.”
We commend the anti-tax legislators in the House who accomplished two things: 1.) Earlier this week, they passed a balanced budget that did not require the temporary income tax hike; 2.) When it was clear that Governor Granholm and Senate Majority Leader Ken Sikkema would not budge from their insistence on raising income taxes, the House negotiated for deeper spending cuts and more tax relief for small businesses by increasing tax credits for health insurance offered to employees.
The tax and budget battles will not go away in Michigan--even with a growing economy the state budget will have to tighten its belt in next year’s budget. Let’s build CSE, strengthen the grass roots resistance to tax and spend policies and be prepared for the battles ahead.