HOUSE BILL No. 4728 May 25, 1999, Introduced by Reps. Cassis, Richardville, Geiger, Van Woerkom, Faunce, Woronchak, Hager, Shackleton, Julian, Gilbert, Bishop, Bisbee, Law, Koetje, Howell, Rick Johnson, Vear and Allen and referred to the Committee on Tax Policy. A bill to amend 1967 PA 281, entitled "Income tax act of 1967," by amending section 51 (MCL 206.51), as amended by 1999 PA 6. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 51. (1) For receiving, earning, or otherwise acquiring 2 income from any source whatsoever, there is levied and imposed 3 upon the taxable income of every person other than a corporation 4 a tax at the following rates in the following circumstances: 5 (a) Before May 1, 1994, 4.6%. 6 (b) After April 30, 1994 and before January 1,20001999, 7 4.4%. 8 (c) For tax years that begin on and after January 1,20009 1999 and before January 1,2002 and on and after January 1,102003, the rate under section 51b, 51c, 51d, or 51e, as11applicable2000, 4.3%. 00199'99 * RJA 2 1 (d) For tax years that begin on and after January 1,20022 2000 and before January 1,2003, 4.1%2001, 4.2%. 3 (E) FOR TAX YEARS THAT BEGIN ON AND AFTER JANUARY 1, 2001 4 AND BEFORE JANUARY 1, 2002, 4.1%. 5 (F) FOR TAX YEARS THAT BEGIN ON AND AFTER JANUARY 1, 2002 6 AND BEFORE JANUARY 1, 2003, 4.0%. 7 (G) FOR TAX YEARS THAT BEGIN ON AND AFTER JANUARY 1, 2003, 8 3.9%. 9 (2) The following percentages of the net revenues collected 10 under this sectionand sections 51b, 51c, 51d, and 51eshall be 11 deposited in the state school aid fund created in section 11 of 12 article IX of the state constitution of 1963: 13 (a) Beginning October 1, 1994 and before October 1, 1996, 14 14.4% of the gross collections before refunds from the tax levied 15 under this section. 16 (b) After September 30, 1996 and before January 1,200017 1999, 23.0% of the gross collections before refunds from the tax 18 levied under this section. 19 (c) Beginning January 1,20001999, that percentage of the 20 gross collections before refunds from the tax levied under this 21 section that is equal to 1.012% divided by the income tax rate 22 levied under this section.or section 51b, 51c, 51d, or 51e, as23applicable.24 (3) The department shall annualize rates provided in subsec- 25 tion (1) as necessary for tax years that end after April 30, 26 1994. The applicable annualized rate shall be imposed upon the 00199'99 * 3 1 taxable income of every person other than a corporation for those 2 tax years. 3 (4) The taxable income of a nonresident shall be computed in 4 the same manner that the taxable income of a resident is comput- 5 ed, subject to the allocation and apportionment provisions of 6 this act. 7 (5) A resident beneficiary of a trust whose taxable income 8 includes all or part of an accumulation distribution by a trust, 9 as defined in section 665 of the internal revenue code, shall be 10 allowed a credit against the tax otherwise due under this act. 11 The credit shall be all or a proportionate part of any tax paid 12 by the trust under this act for any preceding taxable year that 13 would not have been payable if the trust had in fact made distri- 14 bution to its beneficiaries at the times and in the amounts spec- 15 ified in section 666 of the internal revenue code. The credit 16 shall not reduce the tax otherwise due from the beneficiary to an 17 amount less than would have been due if the accumulation distri- 18 bution were excluded from taxable income. 19 (6) The taxable income of a resident who is required to 20 include income from a trust in his or her federal income tax 21 return under the provisions of subpart E of part I of subchapter 22 J of chapter 1 of the internal revenue code, 26 U.S.C. 671 to 23 679, shall include items of income and deductions from the trust 24 in taxable income to the extent required by this act with respect 25 to property owned outright. 26 (7) It is the intention of this section that the income 27 subject to tax of every person other than corporations shall be 00199'99 * 4 1 computed in like manner and be the same as provided in the 2 internal revenue code subject to adjustments specifically pro- 3 vided for in this act. 4 (8) As used in this section:and sections 51b, 51c, 51d,5and 51e:6 (a) "Person other than a corporation" means a resident or 7 nonresident individual or any of the following: 8 (i) A partner in a partnership as defined in the internal 9 revenue code. 10 (ii) A beneficiary of an estate or a trust as defined in the 11 internal revenue code. 12 (iii) An estate or trust as defined in the internal revenue 13 code. 14 (b) "Taxable income" means taxable income as defined in this 15 act subject to the applicable source and attribution rules con- 16 tained in this act. 00199'99 * Final page. RJA