1 of that year, lawmakers and the governor can enact legislation that establishes tax rates of whatever they want - provided they increase with income. This will result, undoubtedly, in legal challenges, which will flood the courts and send the lawyers singing all the way to their online bank.Īlso, beginning in 2025, the guaranteed cut in income taxes for residents who earn less than $175,000 goes away. These are long-established and fundamental principles of governance that this proposal seeks to change, and in the process, creates new gray areas. The constitution gives the Legislature the power to impose taxes and declares that power “shall never be surrendered, suspended or contracted away.” Yet, this proposal gives the governor the ability to impose tax rates unilaterally, to veto what lawmakers suggest, and to impose the rates she wants by executive order, which cannot be rejected by the legislature. ![]() The proposal would also upend important checks and balances. It will also be antiquated in two years time. It is not clear why changing how the state taxes income would require this revenue guarantee in the state constitution. This is an oddly specific mandate to include in a constitution, a document designed to delineate the foundational powers of government. The proposal creates a constitutionally required $1.5 billion increase in state revenue from income taxes by 2023. It splits the spending of that $1.5 billion 50/50 between public schools and infrastructure.īut there are a number of concerns that should give anyone pause.Until 2025, it requires tax cuts on income earned under these thresholds.It would hike taxes by at least $1.5 billion, initially on individuals reporting more than $175,000 in income per year (or families reporting $350,000 or more).Unlike previous efforts - which have been easily defeated at the ballot - this attempt to change the Michigan Constitution doesn’t simply repeal the flat tax, but uses multiple selling points: Editor's Note: This article first appeared in The Detroit News on March 11, 2020.Ī new group in Michigan - confusedly named “Fair Tax Michigan” - recently launched an effort to change the state constitution and establish a graduated income tax.Ĭurrently, Michigan taxes income with a flat tax, meaning everyone pays the same rate, and the more income you earn, the more taxes you pay. The IRS encourages everyone to use their Tax Withholding Estimator to perform a quick “paycheck checkup.” This estimator may help employees ensure that an adequate amount of tax is withheld from paychecks each pay period.To determine the additional withholding amount, you can use the withholding estimator referenced next. The IRS takes your privacy seriously and suggests that, if you are worried about reporting income from multiple jobs in Step 2 or other income in Step 4(a), you check the box in Step 2(c) or enter an additional withholding amount in Step 4(c).Step 1 is for your personal information Step 2 is for households with multiple jobs Step 3 is used to claim tax credits for dependents Step 4 is for other adjustments (additional income such as interest and dividends, itemized deductions that exceed the standard deduction, and extra tax you want withheld) and Step 5 is where you sign the form. Steps 2, 3, and 4 are optional, but completing them will help ensure that your federal income tax withholding will more accurately match your tax liability. Before completing the 2023 Form W-4, please read the instructions that are included with the form.The 2023 Form W-4, Employee’s Withholding Certificate, can be viewed here. ![]() The State of Michigan’s payroll withholding tax rate remains at 4.25%.Federal income withholding tax brackets remain at 10, 12, 22, 24, 32, 35, and 37%. ![]()
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