Specifics of Smith proposal to revamp Mich. taxes

AP News
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Posted: Nov 24, 2009 6:45 PM

A proposal unveiled today by state Rep. Alma Wheeler Smith to revamp Michigan's tax structure to raise $6.5 billion more would:

_Extend the sales tax to services and reduce the overall tax rate from 6 percent to 5.5 percent.

_Eliminate the 22 percent surcharge on the Michigan Business Tax.

_Replace the state's 4.35 percent flat income tax rate with a graduated income tax rate of 4 percent for individuals making zero to $45,000, 7 percent for individuals making $45,000 to $60,000 and 9.75 percent for individuals making more than $60,000 (income brackets would be doubled for joint filers). Some of the tax would be offset for those who itemize deductions on their federal income tax forms.

_Eliminate $3 billion in business tax exemptions.

_Create a new income tax credit that would cover all tuition paid to state universities, community colleges and vocational schools. The credit also would apply to preschool costs.

_Set aside $500 million from the elimination of the business tax exemptions for public education, erasing all the cuts made this fall.