By: Health Insurance
Submitted: 2009-12-10 13:30:50 | Word Count: 602
Taxes industry news provided by Financial News USA. A veteran state lawmaker and Democratic gubernatorial candidate on Tuesday proposed swapping Michigan's flat income tax rate for a graduated one, eliminating a business tax surcharge and some business tax breaks, and lowering the sales tax rate while extending it to services.
The massive tax overhaul would raise $6.5 billion more for state coffers that could be used to restore funding for public schools, local police and fire protection, and important services such as mental health care, Rep. Alma Wheeler Smith said.It also would provide enough money to fund a new income tax credit Smith is proposing that would cover all tuition paid to state universities, community colleges and vocational schools -- in essence, making tuition free. The tax credit also would apply to preschool costs.
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A proposal unveiled today by state Rep. Alma Wheeler Smith to revamp Michigan's tax structure to raise $6.5 billion more would:
--Extend the sales tax to services and reduce the overall tax rate from 6 percent to 5.5 percent.
--Replace the state's 4.35 percent flat income tax rate with a graduated income tax rate of 4 percent for individuals making zero to $45,000, 7 percent for individuals making $45,000 to $60,000 and 9.75 percent for individuals making more than $60,000 (income brackets would be doubled for joint filers). Some of the tax would be offset for those who itemize deductions on their federal income tax forms.
--Create a new income tax credit that would cover all tuition paid to state universities, community colleges and vocational schools. The credit also would apply to preschool costs.
Obama administration pushed back Wednesday against claims that it's not doing enough to slow the growth of health care costs, a topic senators will debate heavily in coming weeks.
White House budget director Peter Orszag cited economists and analysts who say a pending Senate bill would take several steps in that direction. And Orszag left no doubt that the administration supports a provision disliked by many House Democrats, union activists and others: a new tax on generous health insurance plans offered by employers.
A rival health care bill passed by the House would, instead, place a new surtax on millionaires' incomes. Lawmakers must resolve such differences if Congress is to send a bill to President Barack Obama's desk.
