Whitmer proposes $500 tax rebate to working families; state GOP wants bigger cut

The Michigan governor is proposing sending $500 to families from the state's surplus in an effort to combat rising living standard costs amid high inflation and supply chain shortages.

Gov. Gretchen Whitmer sent a letter to leaders in the Michigan legislature Thursday proposing the "MI Tax Rebate Right Now" plan, which issues a one-time payment of $500 to households. 

The letter outlining the rebate proposal groups it in with Whitmer's larger budget proposal that included rolling back the retirement tax for seniors and tripling the Earned Income Tax Credit. 

"While the causes are varied, from the invasion of Ukraine by Russia to ongoing supply chain challenges caused by the pandemic, the pain being felt by people is tangible," she said in a press release. 

The letter didn't discuss any eligibility for the rebate, only that it would go toward "working families."

While Whitmer is proposing to send a one-time $500 tax rebate check to working families now, state GOP leaders are pushing their own plan.

Senate Republicans argue their tax cut is permanent allowing every taxpayer, regardless of income, to take out the savings at tax time every year unless lawmakers change that.

The GOP 2.5 billion tax cut would:

  • Slice Income Tax Rate
  • Hike Personal Exemptions
  • Expand Needy Family Aid
  • Hike Child Tax Credits
  • Senior's Tax Break

The governor's $500 tax break would not go to wealthy taxpayers. The GOP chair of the Senate Finance Committee reports the plan was rewritten to include some of the elements the governor wanted after she vetoed the first GOP proposal.

Whitmer's budget proposal put forward earlier this year is the largest spending plan in Michigan's history - with recommendations to spend $74 billion. Some of that money is buoyed by federal stimulus and pandemic relief. Incoming taxes are also floating the large figure. 

RELATED: What's in Whitmer's $74.1 billion budget?

With the record-size proposal has come several massive spending plans targeting infrastructure, corporate incentives, and education. Meanwhile, it also proposes cutting hundreds of millions in taxes by expanding the tax credit for low-income workers and lifting the retirement tax.

It's a big haul considering the 2021-22 budget was $67.1 billion.

A $500 tax rebate wouldn't be the only one-time period of payments going back to Michigan residents this year. This month, the state finished overseeing more than $3 billion in auto insurance refunds, following a reported surplus of $5 billion by the Michigan Catastrophic Claims Association last year.

MORE: More car insurance refunds possible for Michigan drivers, state says

The money averaged out to about $400 per vehicle owned and insured by Michigan drivers. 

The state government's big spending in the last fiscal year has also included an economic development bill that helped land investment from General Motors.