HB 4187 amends Michigan’s Income Tax Act to revise how corporate income tax revenue is distributed and to make several technical and substantive changes to the corporate income tax base. The bill keeps the corporate income tax rate at 6.0% and continues existing rules for calculating the tax base, including adjustments for certain interest, dividends, net operating losses, related-party intangible expenses, U.S. obligations, oil and gas income and expenses, and mineral income and expenses for qualified taxpayers. It also preserves the ability to carry forward business losses for up to 10 years and includes definitions and rules for unitary business groups and oil and gas subject to severance tax.
The bill’s main policy change is in section 695, where it restructures the distribution of corporate income tax revenue over multiple fiscal periods. For 2022-2025, revenue continues to flow first to the general fund, then to housing, revitalization, and strategic outreach/attraction funds, with the remainder going to the general fund. Beginning in 2025-2026 and continuing through 2029-2030, the bill directs $50 million annually to the Michigan housing and community development fund and then allocates up to $2.2 billion to road-related purposes, including local road agencies and the state trunk line fund, before sending the balance to the general fund. Starting in 2030-2031, the same housing and road funding structure continues, but with updated percentage splits among neighborhood roads, county road commissions, and cities/villages. The bill is tie-barred to several related bills, meaning it does not take effect unless the companion legislation is also enacted.
The general sentiment reflected in the voting history is mixed but favorable enough for passage. The bill was reported from committee with a 10-1 vote and then passed the House on third reading by a 63-45 vote, indicating support from a majority but notable opposition. The immediate-effect roll call suggests supporters viewed the revenue changes as time-sensitive or important enough to take effect without delay.
The main point of contention appears to be the redirection of corporate income tax revenue away from the general fund and toward housing, road agencies, and other earmarked purposes. Supporters likely favor dedicated funding for infrastructure and housing, while opponents may object to reducing general-fund flexibility or to the broader package of tax and spending changes tied to the bill. Because HB 4187 is part of a larger legislative package, some opposition may also stem from the bill’s dependence on the enactment of multiple companion bills rather than its provisions alone.
HB 4187 would amend MCL 206.623 and 206.695 to preserve and clarify corporate income tax base calculations while changing the statutory distribution of corporate income tax revenue across the general fund, housing programs, road agencies, and certain economic development funds. It would not change the 6.0% corporate income tax rate, but it would affect how revenue is allocated beginning in future fiscal years and would create a longer-term earmark for housing and transportation-related spending. The bill also remains tied to a package of related bills, so its legal effect depends on enactment of the companion measures.
The bill appears to have received cautious but meaningful support, as shown by its 10-1 committee report and 63-45 House passage. The immediate-effect vote suggests proponents considered the revenue changes important enough to accelerate implementation. At the same time, the relatively close floor vote indicates substantial reservations among some members, likely centered on the redistribution of corporate income tax revenue and the broader package structure.
The primary controversy is over fiscal priorities: whether corporate income tax revenue should continue to support the general fund or be dedicated more heavily to housing, local roads, and the state trunk line fund. Another point of contention is the bill’s tie-bar arrangement, which makes it contingent on passage of multiple related bills, potentially limiting standalone consideration. Opponents may also object to the long-term earmarking of revenue and the reduced flexibility for future budgets, while supporters likely argue that the bill provides stable funding for infrastructure and housing needs.