HB-4605, As Passed House, June 10, 2015

SUBSTITUTE FOR

HOUSE BILL NO. 4605

     A bill to amend 1967 PA 281, entitled

"Income tax act of 1967,"

by amending section 51 (MCL 206.51), as amended by 2012 PA 223.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 51. (1) For receiving, earning, or otherwise acquiring

income from any source whatsoever, there is levied and imposed

under this part upon the taxable income of every person other than

a corporation a tax at the following rates in the following

circumstances:

     (a) Before May 1, 1994, 4.6%.

     (b) After April 30, 1994 and before January 1, 2000, 4.4%.

     (c) For tax years that begin on and after January 1, 2000 and

before January 1, 2002, 4.2%.

     (d) For tax years that begin on and after January 1, 2002 and

before January 1, 2003, 4.1%.

     (e) On and after January 1, 2003 and before July 1, 2004,

4.0%.

     (f) On and after July 1, 2004 and before October 1, 2007,

3.9%.

(a) (g) On and after October 1, 2007 and before October 1,

2012, 4.35%.

(b) (h) Beginning on and after October 1, 2012, 4.25%.

     (2) The following percentages of the net revenues collected

under this section shall be deposited in the state school aid fund

created in section 11 of article IX of the state constitution of

1963:

     (a) Beginning October 1, 1994 and before October 1, 1996,

14.4% of the gross collections before refunds from the tax levied

under this section.

     (b) After September 30, 1996 and before January 1, 2000, 23.0%

of the gross collections before refunds from the tax levied under

this section.

(2) (c) Beginning January 1, 2000, that percentage of the

gross collections before refunds from the tax levied under this

section that is equal to 1.012% divided by the income tax rate

levied under this section shall be deposited in the state school

aid fund created in section 11 of article IX of the state

constitution of 1963.

     (3) In addition to the distribution under subsection (2), the

following amounts collected under this section shall be deposited

and distributed as provided in section 10(1)(k) of 1951 PA 51, MCL

247.660:

     (a) Beginning October 1, 2015 through September 30, 2016,

$442,000,000.00.

     (b) Beginning October 1, 2016 through September 30, 2017,

$492,000,000.00.

     (c) Beginning October 1, 2017 through September 30, 2018,

$617,000,000.00.

     (d) Beginning October 1, 2018 through September 30, 2019,

$792,000,000.00.

     (e) Beginning October 1, 2019 and each fiscal year thereafter,

an amount equal to $792,000,000.00 multiplied by a fraction, the

numerator of which is the United States consumer price index for

the state fiscal year prior to the fiscal year for which the

adjustment is being made and the denominator of which is the United

States consumer price index for the 2017-2018 state fiscal year.

The resultant product shall be rounded up to the nearest $100.00

increment. However, the distribution under this subsection shall

not be reduced to less than the distribution in the immediately

preceding state fiscal year. As used in this section, "United

States consumer price index" means the average over the period from

October 1 through September 30 of the United States consumer price

index for all urban consumers as defined and reported by the United

States Department of Labor, Bureau of Labor Statistics.

(4) (3) The department shall annualize rates provided in

subsection (1) as necessary. for tax years that end after April 30,

1994. The applicable annualized rate shall be imposed upon the

taxable income of every person other than a corporation for those

tax years.

(5) (4) The taxable income of a nonresident shall be computed

in the same manner that the taxable income of a resident is

computed, subject to the allocation and apportionment provisions of

this part.

(6) (5) A resident beneficiary of a trust whose taxable income

includes all or part of an accumulation distribution by a trust, as

defined in section 665 of the internal revenue code, shall be

allowed a credit against the tax otherwise due under this part. The

credit shall be all or a proportionate part of any tax paid by the

trust under this part for any preceding taxable year that would not

have been payable if the trust had in fact made distribution to its

beneficiaries at the times and in the amounts specified in section

666 of the internal revenue code. The credit shall not reduce the

tax otherwise due from the beneficiary to an amount less than would

have been due if the accumulation distribution were excluded from

taxable income.

(7) (6) The taxable income of a resident who is required to

include income from a trust in his or her federal income tax return

under the provisions of 26 USC 671 to 679, shall include items of

income and deductions from the trust in taxable income to the

extent required by this part with respect to property owned

outright.

(8) (7) It is the intention of this section that the income

subject to tax of every person other than corporations shall be

computed in like manner and be the same as provided in the internal

revenue code subject to adjustments specifically provided for in

this part.

(9) (8) As used in this section:

     (a) "Person other than a corporation" means a resident or

nonresident individual or any of the following:

     (i) A partner in a partnership as defined in the internal

revenue code.

     (ii) A beneficiary of an estate or a trust as defined in the

internal revenue code.

     (iii) An estate or trust as defined in the internal revenue

code.

     (b) "Taxable income" means taxable income as defined in this

part subject to the applicable source and attribution rules

contained in this part.