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Michigan drops business tax, hikes others

May 13, 2011 at 2:49 PM

LANSING, Mich., May 13 (UPI) -- With no votes to spare, the Michigan Legislature has cleared a $2 billion tax break for businesses and hikes for individuals.

The overhaul includes new taxes on pensions and the abolition of the child tax credit and other breaks for individuals, The Detroit News reports.

"Today is marking the death of the Michigan Business Tax," Republican Gov. Rick Snyder said after passage Thursday. "It's about more and better jobs, and creating an environment for our young people to stay in Michigan."

The package is part of Snyder's plan to close a $1.4 billion deficit for fiscal year that starts Oct. 1.

The main bill passed 20-19 in the Senate, with Lt. Gov. Brian Calley breaking a tie. The House produced just the 56 votes needed for passage as some Republicans in both chambers joined all Democrats in opposition.

Republicans agreed to save part of the Earned Income Tax Credit for the working poor -- which Snyder wanted to eliminate -- to secure approval.

Senate Minority Leader Gretchen Whitmer said, "You've chosen winners, and you've chosen losers. Your winners are businesses, and your losers are families and kids."

The business tax will be replaced with a 6 percent corporate levy only on companies with shareholders.

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