LANSING – As majority Michigan Senate Republicans consider alternatives to Governor Rick Snyder’s proposed pension taxes, one possibility appears to be getting significant review: expanding Snyder’s proposed corporate income tax to more than just C-corporations.

Several GOP senators have raised the concept in interviews with Gongwer News Service in recent days. If the 6 percent corporate income tax recommended by Snyder applied to all business filers, not just C-corporations, the move would raise $229 million more than Snyder’s proposal.

That would fill 25 percent of the $900 million hole created by dropping Snyder’s plan to tax currently untaxed pensions earned from public-sector jobs and eliminate the large exemption on pensions from private sector jobs of $45,120 for single filers and $90,240 for married couples.

Senate Republicans have yet to coalesce behind an alternative and discussions are still in the brainstorming phase. But the idea of broadening Snyder’s corporate income tax to all businesses does seem to have traction. Keeping Snyder’s plan as-is would mean that S-corps, LLCs, partnerships and other non-C-corp entities would pay the state income tax of 4.35 percent (scheduled to drop to 4.25 percent in October) instead of the corporate income tax.

Sen. Jack Brandenburg (R-Harrison Twp.), chair of the Senate Finance Committee, said Snyder’s plan would tax only 45,000 of the 140,000 business entities in Michigan, something that he said seems to contradict the governor’s “simple, fair and efficient” mantra when it comes to taxation.

“That’s not fair when it comes right down to it,” he said. “I think that should be considered.”

Snyder, speaking with reporters after a public speech, said he was not concerned the pension tax portion of his tax and budget plans were in trouble. On Monday, Gongwer reported that 10 Republican senators oppose or are leaning against the pension tax proposals.

Combined with the expected opposition of all 12 Democratic senators, that leaves the proposal short of votes for passage.

“I don’t think they’re in trouble at all,” he said. “We’re going to continue the path we’re on, it’s the right path for Michigan. We’re going to stay focused on that. We’re going to continue to have good dialogue with legislators.”

But Brandenburg disagreed.

“I hope the governor’s office understands there’s not too much support, at least in the Senate, at least the way I see it, and from my conversations with people, for a tax on pensions,” he said. “If you want my opinion, I think it’s in big, big trouble. They can spin it any way they want. They can say we’re eliminating an exemption. It’s a tax increase, pure and simple.”

Brandenburg said Senate Republicans would hold another retreat soon. He anticipated it would not be long afterward for the Senate GOP to announce its alternative. That would square with Senate Majority Leader Randy Richardville’s (R-Monroe) timeline of two weeks that he gave last week.

SNYDER TAX CHANGES INTRODUCED IN HOUSE: Snyder’s income and business tax initiatives are now comprised in HB 4361 and HB 4362 .

Rep. Jud Gilbert (R-Algonac), chair of the House Tax Policy Committee, is sponsoring both bills, which were officially introduced Tuesday.

HB 4361 includes all the changes to income tax credits and exemptions, along with instituting the 6 percent corporate income tax. HB 4362 gives businesses the option to carry on certain Michigan Business Tax credits and repeals the MBT once those are exhausted.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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