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Posted on Fri, Jan 11, 2013 : 12:06 p.m.

What to know about Michigan's changing tax structure before filing your returns

By Ben Freed

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Free volunteer-based tax preparation is available from the IRS for those making less than $51,000 or who are over the age of 60.

Angela Cesere | AnnArbor.com file photo

Many of the changes mandated by a major 2011 tax reform package signed into law by Gov. Rick Snyder will begin affecting Michigan taxpayers on their 2012 returns, according to an MLive report.

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The package included an approximate increase of $1.4 billion in additional income taxes balancing out nearly $1.7 billion in business tax cuts. Major changes include the reduction or elimination of the Homestead Property Tax credit and a significant increase in the taxation of private pension income.

Michigan’s base income tax rate for 2012 decreased from 4.35 percent to 4.33 percent as it makes its way down to 4.25 percent in 2013. However, due to loss of exemptions and credits, many taxpayers are expected to pay a higher bill to the state.

Click here to read the full story from MLive.com.

Ben Freed covers business for AnnArbor.com. You can sign up here to receive Business Review updates every week. Reach out to Ben at 734-623-2528 or email him at benfreed@annarbor.com. Follow him on twitter @BFreedinA2

Comments

LarryJ

Sat, Jan 12, 2013 : 8:19 p.m.

His agenda has been to let his wealthy business friends to pay less, and to balance this, to take away from K-12 and college education, poor people, and homeless shelters. And now he is doing his part to weaken unions. We might ask, how did we ever elect such a guy? But part of the answer is that he didn't disclose his intentions before being elected. The anti-transparency governor. I wonder what comes next?

Greg

Sat, Jan 12, 2013 : 5:44 p.m.

Unlike Obama, our state is trying to balance what comes in and what goes out. Novel idea, don't spen more than you have coming in.

clownfish

Sat, Jan 12, 2013 : 2:36 p.m.

If I have this right, if Obama ends the Bush era tax cuts on the wealthiest Americans , then he is bad, even though the end was written into the bills. If Snyder raises taxes on senior citizens and the poor he is good. I love living in a "Christian country" ! Way to go Christian Right in Michigan! WWJD?

Basic Bob

Sat, Jan 12, 2013 : 7:14 p.m.

Senior citizens and the poor pay no income tax, so they don't need the homestead exemption, child tax credits, or credits for contributions to public radio. These tax "increases" are on middle class working Americans, but not on renters, childless couples, and those whose favorite charity is not NPR or a local food bank.

4Bells

Sat, Jan 12, 2013 : 1:03 p.m.

Snyder's sneaky, behind-the-back, insidious, ill-advised tax increases on us, to fund his business handouts, are here! Welcome to the cold, cruel world of Snydernomics. How do you like your governor now?

A2M3

Sun, Jan 13, 2013 : 12:28 a.m.

I didn't like backdoor Nerd to begin with, so I'm not surprised. Unfortunately my vote was not in the majority :-(

Nicholas Urfe

Fri, Jan 11, 2013 : 10:38 p.m.

Screw Snyder, the GOP and the corporations. States with NO INCOME TAX: Alaska Florida Nevada South Dakota Texas Washington Wyoming

Basic Bob

Sat, Jan 12, 2013 : 3:11 a.m.

Drop us a postcard when you get there. You do understand that they pay for everything with sales tax? This is the most regressive tax possible.

Bob Zuruncol

Fri, Jan 11, 2013 : 8:30 p.m.

Beware the stampede of hundreds of new businesses and thousands of new jobs invading the Great State of Michigan, with the $1.7 billion in business tax cuts, plus the Right-to-Work law. Your employer will be offering you a substantial pay raise soon just to retain you as others attempt to lure you away with huge salaries, lush benefits, gorgeous working conditions. Just fix the roads. Please. So I can drive to work. That's all I ask.

Bob Zuruncol

Fri, Jan 11, 2013 : 8:25 p.m.

Beware the stampede of hundreds of new businesses and thousands of new jobs invading the Great State of Michigan, with the $1.7 billion in business tax cuts, plus the Right-to-Work law. Your employer will be offering you a substantial pay raise soon just to retain you as others attempt to lure you away with huge salaries, lush benefits, gorgeous working conditions. Just fix the roads. Please. So I can drive to work. That's all I ask.

Ciccero

Fri, Jan 11, 2013 : 7:56 p.m.

If those of you who think corporations pay any taxes at all you must also believe that there is something free in life. Perhaps that is why you buy into our National Leaders spill about free health care etc. Just like the free Obama Phone, it certainly isnt free when was the last time you checked your cell phone bill and saw you were paying a tax to fund this program. So much for being free. No matter what the percentage of tax collected in the end the consumer ends up paying the tax and probably an additional 1/2 % for all of the administration for either figuring the tax or collecting the tax. To a corporation the tax catagory is just another line item in the budget.

clownfish

Sat, Jan 12, 2013 : 2:33 p.m.

Just like the "Free Obama phone"", which is myth promoted by media elites. http://www.politifact.com/truth-o-meter/statements/2012/oct/31/adam-putnam/putnam-obama-campaign-gives-free-cell-phones-suppo/ It's nice that the people that are corporations don't pay their share, isn't it?

David Briegel

Fri, Jan 11, 2013 : 7:18 p.m.

The "low life moochers" are really the "greedy corporate elite"!

Dog Guy

Fri, Jan 11, 2013 : 6:18 p.m.

As one of the low-life moochers, Westfringe, I am relieved that low-life mooching has been put on a sustainable basis.

Alan Goldsmith

Fri, Jan 11, 2013 : 6:13 p.m.

"Non-refundable tax credits for the following expenses are no longer allowed: college tuition and fees, city income taxes, automobile donations, public contributions, donations to homeless shelters, food banks, community foundations and the Family Development Program" Thanks to each and every Ann Arbor area 'democrat' who kept babbling and tossing money at his campaign and told us "Rick" was a moderate.

clownfish

Sat, Jan 12, 2013 : 2:31 p.m.

it is democrats that are responsible for the GOP governor? It was the dems that called him moderate, not Snyder himself? Was it the democrats that caused him to not answer basic questions about HOW he was going to govern and tax? What about all of the republicans that voted for him all across the state? I guess I did not realize that there were 600,000 democrats in Ann Arbor (that is how many votes he won by) blame the guy with the pen that signs the laws that raise taxes and the congress that puts the law before him!!

justcurious

Fri, Jan 11, 2013 : 11:43 p.m.

Alan, what exactly does this mean? "non-refundable" vs. "refundable". What are non-refundable tax credits? Does this mean that donations to none of those places will be able to be used on the return?

Westfringe

Fri, Jan 11, 2013 : 5:54 p.m.

Thanks Rick! Trapped between the greedy corporate elite and the low-life moochers the middle class has run out of options.

Sparty

Sat, Jan 12, 2013 : 12:55 p.m.

At least she didn't tax pensions, raise taxes so corporate taxes could be reduced, slash the safety net for the poor, lower education support, start a Union War, remove benefits for same-sex partners and children, eliminate catastrophic auto insurance coverage, reduce unemployment coverage during the worst Recession since the Great Depression - just to name a few things.

Basic Bob

Fri, Jan 11, 2013 : 7:15 p.m.

I thank that blonde TV personality who was governor for 8 years for allowing us to keep all the tax credits right through the single state recession and the historic decade of population loss. I guess she thought that would be someone else's problem - all those who stayed. Now she doesn't even come back to visit. I would cancel her retirement checks.

beardown

Fri, Jan 11, 2013 : 5:28 p.m.

"Non-refundable tax credits for the following expenses are no longer allowed: college tuition and fees, city income taxes, automobile donations, public contributions, donations to homeless shelters, food banks, community foundations and the Family Development Program" So he is getting rid of credits for middle and lower economic class people and getting rid of the incentive to donate money to charities, as well as getting rid of incentives for home ownership and other ways people put money into the economy. Explain to me again how this is making Michigan stronger? We are taking money out of the hands of the people we need to spend it to keep us growing.

Rob Pollard

Sat, Jan 12, 2013 : 8:28 a.m.

GoNavy, let's talk "financially astute." When more money (through $1.4 bill in tax breaks) are given back to the well-off/rich, it does indeed tend to go "out of circulation." That's the problem - there is not demand out there, so the business/business owner sits on the money. They have more than enough to pay their bills - you only need so many cars and can only eat out so much - so it doesn't go into the economy. OTOH, if that $1.4 bill was with lower income people, by definition they are more likely to spend it - they have far less of life's necessities and wants, and are thus more likely to take that $1.4 bill and buy something with it, as opposed to letting it sit. In any case, don't believe me: just go around and read all the stories over the past couple days, like here: http://www.detroitnews.com/article/20130112/POLITICS02/301120346/Michigan-economists-predict-lower-tax-revenues-job-growth Growth should be sky-rocketing, considering how far the economy fell leading up to the GM, Chrysler and auto supplier bankruptcies, followed by the bailouts. Instead, "The decline (in tax revenue) is a reflection of tax cuts, slower job growth and consumers having less disposable income after the expiration of a 2 percent federal payroll tax cut holiday, economists said."

beardown

Fri, Jan 11, 2013 : 9:11 p.m.

"Everybody needs to pay. That's why." I 100% agree with you. If we are to get out of this gigantic economic mess, nationally and on the state level, we do all need to pay. Tax everyone the same amount, from the richest to the poorest is the only way to be fair and, if they are to continue to be fair, just cut out every single deduction. Make the instructions a page or two long and the return itself a half sheet and make it simple math. Of course, that would cause all the tax accountants to lose their jobs, but I can live with that. And it will never happen. Our reps at the fed level threw the middle class out with the bathwater and nearly imploded the government over continued tax breaks for the wealthy.

GoNavy

Fri, Jan 11, 2013 : 7:44 p.m.

@kmgeb2000: Just about every economist and financially astute individual who has a clue knows that corporations do not actually end up paying taxes - at least not effectively. Corporations pass those taxes on to you, in the form of higher costs. Revenues that do not find their way to the tax man end up in the pockets of investors - you know, "the owners of equity." Those who have provided financing so that business my hire and invest. By "owners," I do not mean the managers - I mean the shareholders. $1.4B is not "out of circulation," by any means - it's simply no longer in the hands of the State Government. Deep down I think you understand this, but it is a highly inconvenient fact that clouds your argument. You seem to understand that business owners (that is, shareholders) create jobs when there is demand for product. The State Government of Michigan did not create 2,000 engineer and IT staffing positions - Ford did. It did so because it has the capital to invest in the infrastructure that will support such systems, in conjunction with the physical demands of the marketplace. The State Government of Michigan is nowhere in that equation, which is where it should be: Out of the way, not picking winners and losers, and ensuring an evenly-regulated market that individuals can operate and thrive in. Period.

kmgeb2000

Fri, Jan 11, 2013 : 6:37 p.m.

@GoNavy: Except for Corporations who received the nearly $2 billion in tax cuts you mean. As we have been told, Corporation create jobs not the demand for goods and services. The $1.4 billion taken out of circulation will benefit job Michigan growth how? The automotive jobs are returning because product demand requires a larger work force to meet the demand. Ford indicated they need something like 2,000 engineers and IT staff. Those engineers and IT staff, who are in demand in many fields, must decide if Michigan & SE Michigan is a worth place to raise a family. The items listed by beardown all seem to fall in the "NO" column of a decision analysis. The UM is great but for a real work example, a co-work's daughter has select The University of London for her education, and it turns out it's about $20K less expensive. What is the likelihood she will return other than to visit Mom & Dad? My guess is slim.

GoNavy

Fri, Jan 11, 2013 : 6:11 p.m.

Everybody needs to pay. That's why.

treetowncartel

Fri, Jan 11, 2013 : 5:24 p.m.

The chicken has finally come home to roost, thank you governor!