Guest Column: First Week of October Marks Start of New Fiscal Year, Tax Reductions Take Effect

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 10/03/2012 - 16:39


Oct. 1 marks the start of a new fiscal year for the state of Michigan, and also represents the culmination of a new mindset in Lansing. For the first time in almost 10 years, Michigan taxpayers will begin to see a decrease on their personal income tax rate.

The tax reductions are important because it represents a fundamental shift in how Lansing thinks about taxpayer dollars.  In the past, every dollar that reached state coffers was spent, regardless of whether it was used effectively.  Things are different now because we're measuring the effectiveness of those dollars spent.  Why spend hard-earned taxpayer dollars if it's not actually helping anyone, right?

Because of this shift in budgeting practices and an improved economy, the state had some extra revenue this year. So instead of growing state government, we decided it was best that it go back to taxpayers in the form of a personal income tax reduction. 

All Michigan taxpayers began keeping millions of dollars more in their paychecks this week.  One new state law lowers the income tax rate from 4.35 percent to 4.25 percent, while another newly enacted measure increases the personal tax exemption from $3,700 per person to $3,950 per person.  As a member of the House Tax Policy Committee, I was proud to help move these two important reforms through the committee process.

Michigan taxpayers work hard for their paychecks, and any tax revenue not being used in Lansing should be sent back to its rightful owners.  It's an essential change in the way we approach budgeting.  Instead of finding creative ways to spend every last taxpayer dollar, the state needs to work to reduce taxes whenever possible.

Michigan families are paying more for some goods and services these days, and increasing the personal exemption also will help provide some relief.  It's also important to point out that these new laws are based on real revenue projections, and can be done without raising taxes elsewhere or reducing current state programs and services.

The other important milestone for the first week of October is the start of the state's new fiscal year.  While that may not be as exciting as a reduction in your taxes, it's still an important time because of the changes that have taken place in Lansing.

Many people will remember that the state started last year with a $1.5 billion deficit.  Tough reforms were made, and this year we've been able to put more than $500 million into the state's Rainy Day Fund.  A structurally sound state budget tells the country that Michigan is open for business, and the steps we've taken to reform our state's onerous business tax code also have helped to welcome new jobs and economic development to our state.

The nation is taking notice.  Fitch Ratings has upgraded Michigan's credit rating outlook to "Positive," citing our responsible budgets and tax and spending reforms.  Continued evidence of a fiscally sound state budget, additional progress toward re-building reserve funds, and more employment recovery could prompt another rating action for Michigan, Fitch says.

Although we have certainly made some great strides to improve our economy and the state's financial standing, more work is needed to continue Michigan's recovery.  As always, please feel free to contact me with any ideas to improve our state and our quality of life.

(Ouimet is the state representative for the 52nd District.  He may be contacted toll free at 855-627-5052 (855-MARK052) or at [email protected].)

Tran Longmoore's picture
Tran Longmoore
Tran Longmoore is a veteran community journalist. He is founder and owner of He is co-publisher of The Saline Post weekly newspaper. Email him at [email protected] or call him at 734-272-6294.

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