Michigan Republicans Focusing on Tax Cuts
Invigorated by the news that Governor Gretchen Whitmer is looking to pursue tax breaks for seniors and tax credits for the working poor, Republicans have already started to signal they’re eyeing tax cuts in other arenas like the overall personal income tax rate, the personal property tax and the Corporate Income Tax.

Ms. Whitmer brought up the idea of restoring exemptions on retirement income from the income tax, as well as expanding the Earned income Tax Credit, earlier this week in her fourth State of the State address. It was not, however, the first time she had mentioned such things, having proposed movement on the EITC in her first budget recommendation though the Legislature did not advance it. She has called for ending the tax on retirement income since 2018 when she first ran for governor.

On Friday, though, key Republicans in the House and Senate began to signal both in comments and through legislation that they are all-in regarding tax cuts. This comes after the Senate Finance Committee moved a $2.3 billion tax cut package on Wednesday to the Senate floor in SB 768. Yet, despite stressing that this sort of relief was needed for residents and businesses, Republicans continued to push the same mentality that they have throughout 2021 when working on federal funding appropriations: methodical planning, rather than reactive rushing.

Senate Majority Leader Mike Shirkey (R-Clarklake), during a legislator panel sponsored by the Detroit Regional Chamber, said Friday he remains a steadfast supporter of the 2011 tax changes – which he backed as a House member – applying the income tax to retirement income.

"My position hasn’t changed one iota," he said. "I’m all-in for tax reductions across the board, especially if they’re fair. The move we made back in 2011 to make taxes on pensions fair still stands today. I would not support the repeal of that. However, I’d be happy to support a broad-based – for all pensioners – tax relief if that’s on the table."

Budget Director Chris Harkins has said the amount of the ongoing surplus in state revenues is between $600 million and $650 million. Asked Friday about the tax cut package on the Senate floor resulting in a $2.3 billion reduction in revenues, Mr. Shirkey said he anticipated a final bill going to Ms. Whitmer somewhere between those two figures.

"It’s up to the Legislature, in conjunction with the governor, to decide where that lands. And by the way, I believe we also have a lot of common ground, specifically on the EITC," he said.

Mr. Shirkey said he anticipated "a lot of bipartisan support" for boosting the EITC, though he declined to predict a final number. It is now 6 percent of a filer’s federal EITC. Ms. Whitmer has proposed restoring it to the original 20 percent before the 2011 tax changes cut it. A Senate committee is considering taking it to 30 percent.

Mr. Shirkey said the surplus and eventual tax cuts also provide an opportunity to reshape the size of government.

"I’m looking forward to it, and I’m glad the governor’s signed on to and made it very public that she understands this is a very important thing for the people of Michigan to keep more money, they can spend it wiser than us in government can spend it and how important it is to make sure Michigan is competitive," he said.

Speaking to reporters on WKAR’s "Off the Record" on Friday, Sen. Jim Runestad (R-White Lake) – chair of the Senate Finance Committee Track – indicated that the state still has roughly $20 billion in unanticipated funding left in the bank which he took to mean there was no better time to engage in tax cutting than the present. Much of that, however, is one-time federal aid that cannot be used for tax cuts. The amount of unanticipated state revenue is $5.85 billion, though most of that is one-time as well.

"People need a tax cut," he said. "We have raging inflation in the state of Michigan … right now we have one of the highest inflation rates in the nation – 7.5 percent is our inflation rate."

But unlike what the governor is calling for, Mr. Runestad also defended the need for corporate tax cuts as well, pointing to the need to keep Michigan competitive as a job selection site in relation to its neighbors. That cut, he said, could involve putting the tax rate from 6 percent to 3.9 percent.

He also lambasted Michigan as having one of the highest energy costs in the nation, which he believed played into the fact that Ford snubbing the state to bid for projects which were instead sited in Tennessee and Kentucky.

To counterbalance that, Mr. Runestad alluded that a lower corporate tax would help Michigan to "be competitive for all the companies out there."

Two Democrats on the Detroit Regional Chamber panel, House Minority Leader Donna Lasinski (D-Scio Township) and Sen. Sylvia Santana (D-Detroit) were noncommittal on cutting the Corporate Income Tax. Ms. Lasinski said there needs to be a larger overall conversation about how to attract businesses to the state, and Ms. Santana said Senate Democrats are open to many opportunities to expand the economy.

As to why the state should cut the 10-year-old 6 percent Corporate Income Tax, which massively reduced taxation on businesses compared to the Michigan Business Tax, Rep. Andrew Fink (R-Hillsdale) said during the Detroit Regional Chamber panel that a 3.9 percent rate would put Michigan close to the average of the 10 states that grew the most in population from 2020 to 2021.

"I think it would make a modern economy or it would contribute to making us a modern economy," he said. "We really don’t have the luxury to make minor adjustments to our economy when our state, it is stagnant and has been for decades."

It seems there is movement on cutting business taxes in the House, though on a smaller scale.

Rep. Matt Hall (R-Marshall), chair of the House Tax Policy Committee Track, introduced HB 5702 Trackearlier this week which would exempt all personal property taxes beginning in the 2023 tax year. The bill is one page in length and does not offer any indication as to a funding mechanism to replace the lost revenue cities, villages and townships would incur.

In a statement, Mr. Hall indicated that the legislation builds on a previous bill of his – HB 5351 Track, signed by the governor late last year to become PA 150 of 2021. Under that act, the value of small taxpayer personal property tax exemption was increased from $80,000 to $180,000.

This most recent bill looks to extend personal property tax exemptions to small businesses.

Mr. Hall said he believed his legislation would bring "clarity and fairness" to personal property taxes, which he says currently "discourages investment in equipment and materials because owners know the more they get, the more tax they’ll have to pay on it – and that ultimately slows economic activity and progress."

"One warehouse owned by a certain retailer could be taxed one way under our current laws and a warehouse that looks just like it and is owned by another retailer could be taxed another way," he said. "Legislators and members of our committee have heard a ton of questions and confusion regarding this tax. … We need a more common-sense approach."

Speaking to Gongwer on Friday, Mr. Hall acknowledged that securing the funding component for the lost tax revenue was important but that the solution to "get the revenue to make our local governments whole" would come about following conversations between interested stakeholders, House Appropriations Committee Track Chair Rep. Thomas Albert (R-Lowell) and himself.

Mr. Hall also panned the tax as being difficult to administer and burdensome for communities, saying that it was "applied unfairly and unevenly."

"When I look at all the different taxes Michigan charges, this is the one that has the most problems," he said. "We have so many different bills on this topic … whether it’s figuring out how to charge this tax with rental equipment that moves from jurisdiction to jurisdiction. This type of warehouse has PPT, this one does not – there’s just a lot of different problems with this tax. Experiencing this as chairman, it seems obvious to me that we need to look at a better way to collect money for our local governments."

Chris Hackbarth, director of state and federal affairs with the Michigan Municipal League, seemed apprehensive on the topic when asked about his group’s feelings on the bill. While he was emphatic that the MML has been "consistently vocal about the fact that we have a broken municipal finance system."

"If there are opportunities to reform the tax system to give local governments a revenue structure to grow their economies then we’re all in," he said, cautioning that a funding mechanism conversation would need to come up with something in excess of $1 billion – the losses Mr. Hackbarth anticipated municipalities incurring under Mr. Hall’s bill.

Mr. Hackbarth said there was only one of three buckets the state could draw such money from, given the lack of investment in revenue sharing Michigan has seen in the last 15 years: sales and use tax, property tax and personal income tax. The first of the bunch, he said – though the heavy lift of a constitutional amendment would first be needed before raising the sales tax – would be the easiest pill for consumers to swallow of the three options.

"Local governments are in a deficit position, and you’re talking about making the deficit even worse. You need to have an additive conversation here instead of just floating flat," Mr. Hackbarth said. "Everyone right now is talking about attracting talent and jobs. Everyone. … The bottom line is, you can’t attract anyone if you don’t have places where they can live or want to live. And the only way you can get that is investing in communities."

HB 5702 has been referred to the House Tax Policy Committee, which Mr. Hall chairs, though he didn’t say when he anticipated bringing it forward for a hearing.

John James Launches Bid for Congress in New Macomb Swing District

Republican businessman John James announced Monday that he is launching a campaign for the open U.S. House in the competitive new 10th District that’s centered on Macomb County. 

James, 40, of Farmington Hills is the highest profile GOP candidate to enter the race for the new district, which covers parts of Macomb and Oakland counties including Rochester Hills, Warren and Sterling Heights.

He had been recruited by National Republicans who hoped he’d run but he was also considered a possible contender for the gubernatorial race. 

In a video announcement on Twitter Monday, James pitched himself as an "open-minded, free-thinking conservative."

"I’m not afraid to listen, even if you disagree with me. I’m not a career politician. But I do know how to create Michigan jobs," James said. "Faith and family, God and country, service before self. That matters to me because I’m guided by my core principles that have not changed."

The 10th District seat is open after redistricting because U.S. Rep. Andy Levin, D-Bloomfield Township, opted to run for reelection next door in the 11th District that covers parts of Oakland County, along with Rep. Haley Stevens, who had lived in Rochester Hills until late last year.  

Republican Eric Esshaki of Birmingham is also running in the 10th and over the weekend reported raising just over $423,300 last quarter. 

The Democrats haven’t yet recruited a high-profile candidate with broad name ID for the 10th. Democrats officially in the race include Warren City Councilwoman Angela Rogensues and first-time candidate Huwaida Arraf, a civil rights attorney who lives in Macomb Township.

Former state Sen. Steve Bieda, D-Warren, and Macomb County Circuit Judge Carl Marlinga are also possible contenders. 

James, an Iraq veteran, is president of his family’s business, the James Group International, a supply-chain management firm in southwest Detroit. 

"I will use my real-world experience as a CEO in supply-chain management to alleviate the supply-chain crisis driving up the price of everything from groceries to medicine," James said in a statement announcing his candidacy.

“Our community needs a congressman who is grounded in real life. A leader who will defend our freedom, ensure good-paying jobs are available at home and offer to extend a helping hand to our neighbors in need.” 

James ran for U.S. Senate twice and lost in 2018 and 2020 against incumbent Democratic Sens. Debbie Stabenow and Gary Peters, though he outperformed the top of the GOP ticket in both races. He ran with the endorsement of former President Donald Trump. 

James doesn’t seem to reside in the new 10th District, though he isn’t required to in order to be elected to Congress.

James’ race against Peters in 2020 was one of the most expensive in the country that year. Peters of Bloomfield Township defeated James 50%-48%. He lost to Stabenow of Lansing by 6.5 percentage points in 2018.

Shirkey:  Whitmer Should Urge Schools Back to In Person Learning

Governor Gretchen Whitmer should do more to push the handful of large school districts providing education on a remote basis to bring their pupils back to the classroom for in-person learning, but the answer is not a statutory change to force the issue, Senate Majority Leader Mike Shirkey said Friday.

Mr. Shirkey (R-Clarklake), during a Detroit Regional Chamber panel with other legislators, was asked whether the bipartisan law from 2020 providing the state’s public schools with local discretion on operating virtually or in-person because of the COVID-19 pandemic should be changed to remove the virtual option.

Republican and conservative organizations have been demanding that Ms. Whitmer force districts in Detroit, Flint and Ann Arbor, for example, to bring their students back to the classroom.

"Absolutely not," Mr. Shirkey said to changing the law to remove local discretion. "It needed to be left up to the locals, both (the) health department and the schools to make that decision."

Ms. Whitmer, during her State of the State address Wednesday, said schools need to conduct education in person. Thursday, she went a step further and called for those districts operating virtually to bring their students back to their buildings and met with the Flint superintendent.

But she also made clear she would not force districts back to in-person learning.

"The governor has an influence on those districts in particular," Mr. Shirkey said of Detroit, Flint and Ann Arbor. "I don’t think she’s exercised it enough, not with the law and certainly not with the bully pulpit but informing them, inspiring them, encouraging them to do that."

Late Friday, Michigan Public Radio reported the Flint superintendent had said in-person instruction there would begin again on February 7.

House Minority Leader Donna Lasinski (D-Scio Township) reiterated her support for providing districts with flexibility on the requirement that at least 75 percent of students be in attendance for it to count as a school day.

Mr. Shirkey pointed to the Senate’s passage in October SB 664, which provides some flexibility on that issue. He said districts should have flexibility on days "when they’re around that 75 percent number because it was a little bit of an arbitrary number to begin with. But for school districts who choose to continue to be closed, I have no interest in changing that number for them."


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**Updated Information Regarding Proof of Financial Responsibility Insurance Requirements for Medical Applicants and Licensees**

As previously communicated, PA 160 and PA 161 were signed by the Governor on December 27, 2021. These laws do not take immediate effect and as such the application and process for applicants and licensees will remain unchanged at this time. When the laws take effect on March 30, 2022, the MRA will update the application to align with the requirements of the law. We apologize for any confusion. As always applicants and licensees are encouraged to obtain applications and forms directly from the website to ensure they are using the most up to date materials.


House Bills 5058 to 5061 would amend several acts pertaining to industrial hemp to exclude food and certain products from being considered “adulterated” solely on the basis of containing industrial hemp, limit the liability of growers for violations of the Industrial Hemp Growers Act, and revise or delete defined terms.  These bills, along with HB 5617–requirements for industrial hemp added to food or dietary supplement–will be heard today, 2/1.

Additionally, HB 5512 which corrects inconsistencies between the Michigan Medical Marijuana Act and certain parts of the revised judicature act of 1961 related to drug treatment courts will also be heard in Regulatory Reform this week.

DCD will continue to monitor these bills and provide updates as necessary.

DCD continues to exist as the premier resource helping municipalities navigate the waters of cannabis policy. We would be more than happy to answer any questions you may have regarding medical or recreational cannabis policy, procedure, and more. DCD is available for presentations to municipal boards, for one-on-one meetings, and for consultations.

We are here to help you with: municipal lobbying, license application writing and assistance, business plans, state required operations manuals and compliance, facility design, corporate structure, and design and branding. 

We are experts in both medical and recreational cannabis policy and have been in the space for over ten years.  We welcome any opportunity to work with you in the future! 


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