I’m not sure if Gov. Gretchen Whitmer is putting her name on them, but you can thank the governor for the $180-per-person rebate check you’re getting later this spring or summer.
Michigan is sitting on $9.2 billion thanks to an economy still buzzing from the extra money the feds printed during the height of the COVID pandemic.
The tax dollars are flowing into the Michigan Treasury so fast and so furiously that an income-tax reduction trigger that few thought would ever be tripped was set to be activated, according to early guesses from the state’s bean counters.
Our 4.25% rate is slated to drop to 4.05% starting next year. The early math here is if you make $50,000 in taxable income, that’s $100 a year … every year until the tax rate is changed again.
And here’s where the rub comes in.
The governor was a legislator during the Great Recession. She remembers the lean times. College scholarships were canceled. Adult Medicaid patients saw their dental coverage canceled. Colleges and local governments all had their oxen gored.
The Democratic governor wants to fund programs for students and the financially struggling, not starve government till there’s another round of forced cuts years down the line.
She doesn’t want to be stuck with a lower tax rate that doesn’t raise enough money to pay for all of her programs in 2025 or 2026.
So, here come the $180 rebate checks.
State government doesn’t have the money to permanently cut the income tax rate, issue rebate checks and continue the long-term programs Whitmer wants to continue long after she’s gone.
Where’s the legacy in creating tutor programming, for example, if the state runs out of money to pay for it in a couple of years?
Why subsidize a generic pharmaceutical company to kick out low-cost insulin only to watch it wither because there’s not enough money to pay for it?
Would you rather have the rebate checks or the tax cut? Functionally, it doesn’t matter. You don’t get a choice in the matter.
Looking at it more broadly, though, it does.
It’s still really early in this term, but once this tax rebate check goes out, there probably isn’t going to be another one from the state of Michigan.
If the Governor’s Office finds a legal opinion or another trap door to get around not cutting the income tax, they’re going to do it and set the precedent.
This is a defining moment not just for Whitmer, but the state legislators who are being asked to vote on it. If you don’t like the decision, the lawmakers who signed off on it are just as culpable as the governor.
That’s why this question matters. Would you rather have the rebate check or the tax cuts?
Politically speaking, your answer probably will stick with you long after that $180 is spent.
If you’re a small business owner who claims your business’s income on your individual tax return, you want that tax cut year after year. If you’re making well north of six figures, the benefit of having that tax cut is going to be well over $180.
But if you’re scraping by on a couple of minimum wage jobs, $180 now sounds a lot better than $180 spread out over three years. For the working people who would rather have money now than later, that check being directly deposited into your bank account come June sounds kind of nice.
Combine the $180 with the large Earned Income Tax credit the governor and Democrats are kicking out along with the rebate check and it’s pretty clear the working-class folks have an appetite for what the Dems are serving up.
If you’re OK with the money now, though, you’re OK with it. Whitmer is counting on you remembering that it came courtesy of the Democrats.
Just remember the check is coming instead of a permanent tax cut and you need to be OK with that, too.
(Email Kyle Melinn of the Capitol news service MIRS at firstname.lastname@example.org.)
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