HOUSE BILL No. 4513 March 18, 1997, Introduced by Reps. Oxender, Dobb, McBryde, Gilmer, Middleton, Jellema, Bobier, Crissman, Martinez, Bodem, Hammerstrom, Law, Godchaux, Birkholz, Dalman and Goschka 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 1995 PA 194. 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, 4.4%. 7 (2) The following percentages of the net revenues collected 8 under this section shall be deposited in the state school aid 9 fund created in section 11 of article IX of the state 10 constitution of 1963: 01119'97 ** RJA 2 1 (a) Beginning October 1, 1994 and before October 1, 1996, 2 14.4% of the gross collections before refunds from the tax levied 3 under this section. 4 (b) After September 30, 1996 AND BEFORE JANUARY 1, 1997, 5 23.0% of the gross collections before refunds from the tax levied 6 under this section. 7 (C) AFTER DECEMBER 30, 1996, 29.3% OF THE GROSS COLLECTIONS 8 BEFORE REFUNDS FROM THE TAX LEVIED UNDER THIS SECTION OR THE 9 AMOUNT DETERMINED UNDER SUBSECTION (3), WHICHEVER IS GREATER. 10 (3) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (2)(C), AFTER 11 SEPTEMBER 30, 1997, AN AMOUNT EQUAL TO THE GROSS COLLECTIONS THAT 12 WOULD BE RECEIVED UNDER THIS ACT IF THE TAX RATE UNDER SUBSECTION 13 (1) WAS 1.29%, SHALL BE DEPOSITED IN THE STATE SCHOOL AID FUND 14 CREATED IN SECTION 11 OF ARTICLE IX OF THE STATE CONSTITUTION OF 15 1963. THE 1.29% RATE UNDER THIS SUBDIVISION IS NOT A RATE IN 16 ADDITION TO THE RATE SET FORTH IN SUBSECTION (1). 17 (4)(3)The department shall annualize rates provided in 18 subsection (1) as necessary for tax years that end after 19 April 30, 1994. The applicable annualized rateshall beIS 20 imposed upon the taxable income of every person other than a cor- 21 poration for those tax years. 22 (5)(4)The taxable income of a nonresident shall be com- 23 puted in the same manner that the taxable income of a resident is 24 computed, subject to the allocation and apportionment provisions 25 of this act. 26 (6)(5)A resident beneficiary of a trust whose taxable 27 income includes all or part of an accumulation distribution by a 01119'97 ** 3 1 trust, as defined in section 665 of the internal revenue code, 2 shall be allowed a credit against the tax otherwise due under 3 this act. The credit shall be all or a proportionate part of any 4 tax paid by the trust under this act for any preceding taxable 5 year that would not have been payable if the trust had in fact 6 made distribution to its beneficiaries at the times and in the 7 amounts specified in section 666 of the internal revenue code. 8 The credit shall not reduce the tax otherwise due from the bene- 9 ficiary to an amount less than would have been due if the accumu- 10 lation distribution were excluded from taxable income. 11 (7)(6)The taxable income of a resident who is required 12 to include income from a trust in his or her federal income tax 13 return underthe provisions of subpart E of part I of subchapter14J of chapter 1 of the internal revenue code, 26 U.S.C.SECTIONS 15 671 to 679,OF THE INTERNAL REVENUE CODE shall include items 16 of income and deductions from the trust in taxable income to the 17 extent required by this act with respect to property owned 18 outright. 19 (8)(7)It is the intention of this section that the 20 income subject to tax of every person other than corporations 21 shall be computed in like manner and be the same as provided in 22 the internal revenue code subject to adjustments specifically 23 provided for in this act. 24 (9)(8)As used in this section: 25 (a) "Person other than a corporation" means a resident or 26 nonresident individual or any of the following: 01119'97 ** 4 1 (i) A partner in a partnership as defined in the internal 2 revenue code. 3 (ii) A beneficiary of an estate or a trust as defined in the 4 internal revenue code. 5 (iii) An estate or trust as defined in the internal revenue 6 code. 7 (b) "Taxable income" means taxable income as defined in this 8 act subject to the applicable source and attribution rules con- 9 tained in this act. 10 Enacting section 1. This amendatory act takes effect 11 October 1, 1997. 01119'97 ** Final page. RJA