Both the corporate and the personal income tax could be reformed by President Donald Trump signing into law the “Tax Cuts and Jobs Act”. This is because one of the provisions of the tax does away with personal exemptions. There has been a rise in federal standard deduction. This compensates for elimination. The state taxes, however, could rise. As a response to probable tax increases, Rick Snyder, the Governor of Michigan, and Brian Calley, the Lieutenant Governor, had proposed a solution to compensate for personal exemptions removal.
Tax liability reduction
Lawmakers in Michigan are thus trying to compensate for that tax liability. Residents of Michigan pays 4.25 percent flat income tax. The Trump-signed bill changes the method people calculate how they get taxed.
Republican lawmakers are enthusiastic about the new bill. Beau LaFave, Michigan's 108th District State Representative, said that President Trump and the Republican-controlled Congress lowered the taxes imposed on Americans. He said that the corporate taxes were too high compared to the rest of the world. He continued on to say that President Trump delivered what he had promised during his presidential election time.
Deductions and taxes
For taxpayers, the taxable amount gets substantially reduced via deductions. This may go up to about $4,000 for every person every year. Brian Calley, the Lieutenant Governor of Michigan, said that a majority of Americans will henceforth file under broad standard deduction. As per the Internal Revenue Service, standard deduction refers to the dollar amount which reduces the income amount that is taxed. This varies as per the individual's filing status. This new plan increases standard deduction. However, the personal exemptions get eliminated. Calculations related to this matter are separately done. There is a possibility that it may increase the taxable income. The tax liability may rise about $200 per head per year.
LaFave assured the Michigan residents that since no money is owed at present as taxes, nothing is going north. He said that taxes went north in 2018, and the changes have not come into force as yet. He reminded them that there is no requirement to change the existing state tax code to adjust with the tax code adopted by the federal government. The state could benefit by $1.5 billion as state tax revenues, but lawmakers from Michigan said that cannot be done as it is not in the spirit of the new tax law.