Politicians are nothing if they’re not creative.

In 2023, Michigan Gov. Gretchen Whitmer’s administration certainly proved that when they used the definition of the word “current” to reverse a tax cut passed in 2015. Fortunately for taxpayers, the Mackinac Center is fighting to restore the tax relief Michiganders were promised even though the Michigan Supreme Court in August dismissed Mackinac’s efforts to secure a permanent income-tax reduction.

The Tax Cut

In 2015, Michigan’s economy was starting to show signs of recovery from the Great Recession. However, the state still had plenty more progress to make as well as some significant infrastructure needs. As Former Gov. Rick Scott explains:

“Back in 2014, we needed to raise revenue for road repairs. Our roads were in poor condition. […] So, in 2015, I negotiated an agreement with the House and Senate on gas taxes and license fees, which included indexing the gas tax to inflation. We also agreed to devote a certain amount of general fund revenue to roads.

“The House and Senate only agreed to move forward if we also provided a path to an income tax cut. At the time, the individual income tax rate was 4.25%, following a 2007 increase. The Legislature wanted to bring rates back down for hardworking families.

“I agreed that returning the income tax to below 4% was right, but the timing was wrong. Michigan was still trying to get our financial footing back after the damage of the Great Recession, which included paying down our long-term debt. So, I proposed a formula where the income tax rate would go down when the state had enough of a budget surplus — basically, a guarantee of fiscal responsibility.”

The legislature passed the tax cut and Gov. Scott signed it into law. Based on state recovery data, leaders estimated that the state’s finances would improve enough by the mid 2020’s for the tax cut to kick in.

Fortunately for taxpayers, the state’s economy performed better than expected and brought in enough revenue to activate the tax cut in 2023. Unfortunately for taxpayers, Michigan’s new governor wasn’t interested in keeping the state’s tax-relief promise.

Mackinac Challenges Revised Definition of “Current”

Even though Gov. Whitmer handed out $3 billion in corporate tax incentives (read: taxpayer-funded corporate handouts) in 2023, her administration cried poor when a state surplus activated the $700 million tax cut. As the Wall Street Journal explains:

“In March, rising state revenue triggered an automatic income-tax rate cut to 4.05% from 4.25%. That amounts to a $130 savings for an average family, and it’s the first rate reduction Michiganders have had in more than a decade.

“But Democrats in Lansing say the tax cut is only for 2023, and they’ll collect 4.25% from taxpayers next year unless a judge tells them to stop. Attorney General Dana Nessel, Ms. Whitmer’s loyal political servant, laid out the legal theory to justify canceling the automatic cut. She argues that the law behind the automatic tax cuts reduces the tax rate only in the current year of a budget surplus.”

Gov. Whitmer and Attorney General Nellel’s argument for making the permanent tax cut temporary is all based around the fact that the tax cut legislation used the term “current rate” when describing the state’s income tax rate. They argue that the word “current” means that the cut was only intended to apply to the “current” year of the budget surplus.

Confused yet?

In response to Gov. Whitmer’s attempt to warp logic and the English language, Mackinac‘s team worked with former Gov. Scott to place an op-ed in the Detroit News clarifying what the law intended, “Take it from me, the governor who signed this tax cut into law: We gave Michigan families permanent relief because an efficient and effective state government should prioritize returning their hard-earned dollars to help cover the rising costs they face in their lives.”

Mackinac Center Taking a Stand for Taxpayers

The Mackinac Center has always been one of the biggest (if not the only) champions for taxpayers in the Wolverine State. So when Gov. Whitmer’s administration made it clear they were set on ripping away the tax cut Michiganders were promised, Mackinac’s team took action.

In August 2023, Mackinac filed a lawsuit on behalf of a coalition of business groups, individuals, and lawmakers, demanding that the state treasurer adhere to the original intent of the tax cut law. In the lawsuit, Mackinac argues that legislative history and the dictionary definition of the word “current” indicate that the reduction is meant to stay at 4.05%, until the trigger once again lowers the rate. If lawmakers want to avoid automatic rate reductions and increase taxes instead, they must change the law.

Mackinac Team Unleashes Statewide Media and Marketing Blitz

In addition to the lawsuit, Mackinac’s team also executed a statewide media and marketing blitz to make sure taxpayers knew what the governor was trying to do. Almost every major news outlet in the state—and some national outlets—covered Mackinac’s lawsuit after they filed.

Then, Mackinac’s team placed stories about their lawsuit and what the governor was trying to do in outlets like the Wall Street Journal, National Review, Detroit News, Bloomberg tax, Law360, Crains Detroit, and many more. Also, Mackinac reached nearly 300,000 on social media, and a lead generation ad campaign added 2,400 to the Mackinac Center’s email list.

Tax debates aren’t the sexiest political topics but because of Mackinac’s effective strategy, Michiganders are now at least aware of the governor’s tax grab.

Mackinac’s case made it all the way to the Michigan Supreme Court and even though the case was dismissed and the court sided with the governor and attorney general’s attempt to cheat taxpayers out of the relief they were promised, Mackinac will continue to encourage lawmakers to make the income-tax reduction permanent.

Regardless, the governor and state leaders have now been put on notice. As long as Michigan has the Mackinac Center, no amount of creativity will allow them to cheat taxpayers.