HOUSE BILL No. 4404 March 9, 1999, Introduced by Reps. Law and Richner 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, 2000, 4.4%. 7 (c) For tax years that begin on and after January 1, 2000 8 and before January 1, 2002 and on and after January 1, 2003, the 9 rate under section 51b, 51c, 51d, or 51e, as applicable. 10 (d) For tax years that begin on and after January 1, 2002 11 and before January 1, 2003, 4.1%. 00222'99 * RJA 2 1 (2) The following percentages of the net revenues collected 2 under this section and sections 51b, 51c, 51d, and 51e shall be 3 deposited in the state school aid fund created in section 11 of 4 article IX of the state constitution of 1963: 5 (a) Beginning October 1, 1994 and before October 1, 1996, 6 14.4% of the gross collections before refunds from the tax levied 7 under this section. 8 (b) After September 30, 1996 and before January 1, 2000, 9 23.0% of the gross collections before refunds from the tax levied 10 under this section. 11 (c) Beginning January 1, 2000, that percentage of the gross 12 collections before refunds from the tax levied under this section 13 that is equal to1.012%1.276% divided by the income tax rate 14 levied under this section or section 51b, 51c, 51d, or 51e, as 15 applicable. 16 (3) The department shall annualize rates provided in subsec- 17 tion (1) as necessary for tax years that end after April 30, 18 1994. The applicable annualized rate shall be imposed upon the 19 taxable income of every person other than a corporation for those 20 tax years. 21 (4) The taxable income of a nonresident shall be computed in 22 the same manner that the taxable income of a resident is comput- 23 ed, subject to the allocation and apportionment provisions of 24 this act. 25 (5) A resident beneficiary of a trust whose taxable income 26 includes all or part of an accumulation distribution by a trust, 27 as defined in section 665 of the internal revenue code, shall be 00222'99 * 3 1 allowed a credit against the tax otherwise due under this act. 2 The credit shall be all or a proportionate part of any tax paid 3 by the trust under this act for any preceding taxable year that 4 would not have been payable if the trust had in fact made distri- 5 bution to its beneficiaries at the times and in the amounts spec- 6 ified in section 666 of the internal revenue code. The credit 7 shall not reduce the tax otherwise due from the beneficiary to an 8 amount less than would have been due if the accumulation distri- 9 bution were excluded from taxable income. 10 (6) The taxable income of a resident who is required to 11 include income from a trust in his or her federal income tax 12 return under the provisions of subpart E of part I of subchapter 13 J of chapter 1 of the internal revenue code, 26 U.S.C. 671 to 14 679, shall include items of income and deductions from the trust 15 in taxable income to the extent required by this act with respect 16 to property owned outright. 17 (7) It is the intention of this section that the income 18 subject to tax of every person other than corporations shall be 19 computed in like manner and be the same as provided in the inter- 20 nal revenue code subject to adjustments specifically provided for 21 in this act. 22 (8) As used in this section and sections 51b, 51c, 51d, and 23 51e: 24 (a) "Person other than a corporation" means a resident or 25 nonresident individual or any of the following: 26 (i) A partner in a partnership as defined in the internal 27 revenue code. 00222'99 * 4 1 (ii) A beneficiary of an estate or a trust as defined in the 2 internal revenue code. 3 (iii) An estate or trust as defined in the internal revenue 4 code. 5 (b) "Taxable income" means taxable income as defined in this 6 act subject to the applicable source and attribution rules con- 7 tained in this act. 00222'99 * Final page. RJA