Michigan House defeats proposed income tax cut

The Michigan Capitol in Lansing.

LANSING, Mich. (AP) — The Latest on the Michigan House’s income tax proposal (all times local):

4 a.m.

The fallout over Michigan House Republicans’ failure to pass an income tax cut is already underway.

GOP House Speaker Tom Leonard announced after 3 a.m. Thursday that he removed Republican Rep. Jason Sheppard of Temperance as chairman of the Financial Services Committee. Leonard says Sheppard, who voted against a bill to cut the 4.25 percent income tax to 3.9 percent over four years, told him he would vote yes.

Leonard says in statement that it’s “unacceptable” that Sheppard “lied” about his position. Sheppard could not immediately be reached to comment.

The House early Thursday fell three votes short of the 55 needed to move the legislation to the Senate.

Leonard named Republican Rep. Diana Farrington of Utica the new chairwoman of the committee. Sheppard will no longer serve on the panel.

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1:55 a.m.

The Republican-led Michigan House has defeated legislation to lower the state’s income tax.

The bill that fell three votes short of passage early Thursday would lower the 4.25 percent tax to 4.05 percent by 2019 and then to 3.9 percent by 2021 as long as the state savings, or rainy day, fund is not below $1 billion.

Eleven Republicans joined all but one Democrat in opposing the legislation.

Republican Gov. Rick Snyder has voiced concerns about the budget implications of a tax cut.

Conservatives say Michigan’s income tax should return to 3.9 percent, where it was as recently as 2007 before being increased to address a budget deficit.