In bid to eliminate state income tax, fears of another Kansas

income tax forms
Tom Leonard

GOP House Speaker Tom Leonard backs a plan to eliminate the state income tax over a period of 40 years.

In July 2012, two months after GOP Kansas Gov. Sam Brownback signed a substantial state income-tax cut into law, he issued a forecast: “Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy.”

The economic jolt that ensued was perhaps not what Brownback envisioned.

From the end of 2012 to early 2016, Kansas’ GDP grew at less than half the national rate. Cuts in state revenue forced K-12 schools to close early and led to funding reductions for universities. To balance the budget, Brownback siphoned hundreds of millions of dollars from state highway funds. Moody's twice downgraded the state's bond rating. As of November, Kansas was still laboring to close a $345 million budget hole.

The 2012 cut was to be, according to those who advised Brownback, the first step toward eliminating that state's income tax.

While Kansas took a different tack, ending the state’s income tax is also the goal of GOP lawmakers in recently announced measures in Michigan’s House and Senate.

House Speaker Tom Leonard of DeWitt is backing a bill sponsored by Rep. Lee Chatfield of Levering that would cut the state's 4.25 percent income tax to 3.9 percent in January 2018. The plan then calls for further rollbacks of  0.1 percent each year until the tax is eliminated over 40 years. State Sen. Jack Brandenburg of Macomb County, meanwhile, said he intends to introduce a bill to scrap the income tax over just five years.

Both plans would erase what is today a $9 billion annual revenue stream – more than a third of total state tax revenue. Backers of the proposals have not said where funds to compensate for that loss would come from.

The proposals are stirring a familiar economic debate, amid warnings by critics that the tax plans could render Michigan another Kansas -- while shifting a higher tax burden on state residents with the lowest incomes.

The House bill would slash income tax revenue by more than $800 million in its first year, and about $200 million a year thereafter.

In a statement to Bridge Magazine, Leonard spokesman Gideon D'Assandro said: “We would rather have Michigan's hard-working taxpayers keep the money they've earned, instead of a government agency. They are able to make the best decisions for their families.”

Who Pays What

Wealthier Michigan residents pay a smaller share of income in state and local taxes.

Less than $17,000: 9.2 percent

$17,00 to $34,000: 9.4 percent

$34,000 to $56,000: 9.2 percent

$56,000 to $88,000: 9.0 percent

$88,000 to $165,000: 7.7 percent

$165,000 to $392,000: 6.8 percent

More than $392,000: 5.1 percent

Source: Institute on Taxation and Economic Policy

D'Assandro said Leonard is “open to having a conversation” over how the state could compensate for lost revenue. But he did not specify where any spending cuts might land.

As for any comparison to Kansas, D'Assandro noted that the House’s 40-year tax plan “is responsibly phased in over a long period of time.”

A spokesman for GOP Gov. Rick Snyder underscored concern about making up lost revenue, however.

Press secretary Anna Heaton said Snyder wants proof there is “adequate” revenue from other sources to make up the difference. Adding to further stress on the current budget, a Snyder-appointed commission said in December that Michigan needs about $4 billion a year more than it currently takes in to upgrade its transportation, water and communications infrastructure.

“There would need to be concrete data to demonstrate that there is adequate revenue from sources besides the income tax to ensure services for residents and investing in our statewide infrastructure would not be adversely affected,” Heaton said.

Republicans, including Leonard, describe a direct connection between lower taxes and economic growth, a central tenet of supply-side economics and conservative economic analysis.

Michael LaFaive of the Midland-based Mackinac Center for Public Policy, a free-market think tank, called the state House tax proposal “a good first step.” He said that there is no question Michigan “is still taxed too much. We should be a leader in efficient government.

“There is a very large body of academic literature on the link between taxes and economic growth. The literature almost always shows the negative link between high taxes and growth.”

He cited a 2010 academic study of post-World War II federal tax rates by the American Economic Association that found that one category of tax increases resulted in a subsequent reduction of GDP (A conclusion that itself has come under criticism).

This position has produced pushback from budget analysts including Michigan State University economist Charles Ballard, who warns that Michigan's “obsession with tax cuts” has already inflicted great harm to the state's infrastructure and quality of life.

Charles Ballard

Michigan State University economist Charles Ballard: “We have sacrificed a great deal of our quality of life on the altar of tax cuts.”

Ballard cited federal analysis showing state and local taxes as a share of personal income have already steadily fallen in Michigan from more than 13 percent in 1972 to 9.6 percent in 2011 – resulting in a net revenue loss of about $10 billion in today’s dollars.

“If we had raised only a fraction of that, we would have been able to avoid poisoning children in Flint,” said Ballard, referring to the ongoing lead crisis that resulted from government errors while Flint was under state emergency financial management. “We have sacrificed a great deal of our quality of life on the altar of tax cuts.”

Ballard contends that tax levels are less important to determining economic growth than other factors, including the skill and education level of the workforce. “For the most part, the states with the highest incomes are not low-tax states,” he said. “Instead, the most affluent states are the ones with the most highly educated populations.”

Michigan in the middle

To be sure, the question of whether Michigan is taxed too much or too little remains a matter of perspective and ideology. So, too, is the debate over how much taxpayers of different income levels should pay.

Overall, according to the Tax Foundation, a Washington D.C. tax research organization, Michigan ranked 25th among the 50 states in the share of income paid in fiscal 2012 paid toward all state and local taxes, with 9.4 percent of  income paid in those taxes. That was a lower percentage than surrounding Midwest states, with Indiana residents paying 9.5 percent, Ohio at 9.8 percent, Minnesota 10.8 percent and Wisconsin and Illinois at 11 percent each.

Seven states - Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming – levy no state income tax, with four of those states relying on higher sales taxes than Michigan imposes. Tennessee and New Hampshire tax only investment interest and stock dividends.

Critics of these tax cuts note that states with no income tax tend to put a higher share of the tax burden on low-income residents.

According to a 2015 report by the Institute on Taxation and Economic Policy, a nonpartisan research organization, five states with no income tax are ranked among the top 10 most regressive in tax structure. In reaching its conclusion, the report compared the share of personal income paid at different income levels in state and local taxes.

Michigan ranked 29th among the 50 states for tax fairness with the 1st-ranked state, Washington, considered the most regressive. Michigan is among eight states – out of 41 with an income tax – that levy a flat income tax. The other 33 rely on a progressive formula in which the wealthy pay a higher percentage.

Sen. Jack Brandenburg, R-Harrison Township, wants to eliminate the state income tax over five years and has floated the idea of an across-the-board freeze on state spending to help balance the lost revenue.  

In non-elderly households in Michigan, those earning $17,000 to $34,000 paid 9.4 percent of their income toward the overall cost of state and local taxes; those between $88,000 to $165,000 paid 7.7 percent; and those earning more than $392,000 – the top 1 percent – paid 5.1 percent of their income in taxes.

In sales tax alone, those at the bottom 20 percent of income pay 6.3 percent of their income on sales tax. That's eight times higher than the 0.8 percent share paid by the top 1 percent.

If Michigan tried to make up lost income revenues through a hike in the sales tax, critics say the burden on low-earners would grow even more. Currently, Michigan gets just over a quarter of its tax revenue from the state’s 6 percent general sales tax. That tax would have to be doubled to 12 percent to make up for lost income tax revenue (Any such increase would have to be approved by voters).  

That would give Michigan the highest sales tax in the nation.

Fear of more spending cuts

If, instead, Lansing turns to spending cuts alone to make up for cuts in the income tax, the results would be “devastating,” said former state Treasurer Robert Kleine, who served under Democratic Gov. Jennifer Granholm from 2006 to 2010.

“If your idea is to get rid of state government, this is a good way to do it. It would be just cuts, cuts, cuts, every year until everything is gone. I'm not sure you could operate schools. There would be no support for higher education. You would have to cut State Police way back. You would have to close a bunch of prisons and let people out.”

Taxing the Poor

Wiping out the state income tax could lead to a hike in sales tax, which hits low-income residents hardest. The share of income paid in 2015 in sales and excise by income class

Lowest 20 percent: 6.3 percent

Second 20 percent: 5.0  percent

Middle 20 percent: 3.9 percent

Fourth 20 percent: 3.1 percent

Next 15 percent: 2.3 percent

Next 4 percent: 1.6 percent

Top 1 percent: 0.8 percent

Source: Institute on Taxation and Economic Policy

 

Kleine said there is evidence in everything from roads to higher education that Michigan can ill afford such cuts. Michigan ranked 50th in 2013 in per capita state and federal spending on highways. A 2015 report found that Michigan cities including Detroit, Grand Rapids, Flint and Ann Arbor had among the worst roads in the nation.

And in higher education, Michigan ranked 15th lowest in 2014-15 in funding per student for public universities.

“How much lower can you go?” Kleine asked.

Gilda Jacobs, president and CEO of the Michigan League for Public Policy, said she considers the House tax plan a recipe for “financial chaos,” particularly if it results in a higher sales tax.  

“It would really cut into their ability to pay their utilities, to pay their rent, pay for car insurance,” she said. “Those are real dollars that come out of their income.”

Anthony Minghine, associate executive director of the Michigan Municipal League, said that his organization has concluded that Michigan communities have already lost more $6 billion in statutory revenue sharing since 2002 because of state cuts to the formula. That has left many cities struggling to balance budgets and maintain deteriorating parks and crumbling streets and sewer systems.

“There's no ability to take another nickel out of our of local government. About 85 percent of our GDP comes out of our metro areas. If we disinvest in our communities, we are crippling our economic engine,” Minghine said.

Another hurdle: The $1.2 billion road funding bill signed into law in 2015 is scheduled to siphon $600 million a year from income tax receipts for road repair by the 2020-21 fiscal year. That's on top revenue lost from a $1.8 billion annual business tax cut approved in 2011.

Most income tax revenue goes toward the state’s general fund, which pays for a variety of  government functions. Just under one-third goes to K-12 public schools.

Doug Pratt, spokesman for the Michigan Education Association, said Michigan K-12 schools would be decimated should that revenue source be wiped out and not replaced.

“The $64,000 question here is where is the money going to come from? Outright elimination of the income tax would put a huge hole in the school aid fund.”

But LaFaive, of the Mackinac Center, contends there is plenty of fat to cut in Michigan government.

In 2014, he identified $2.1 billion that should be cut from the state’s $55-billion budget, which includes both state and federal funding. That would include eliminating statutory revenue sharing, which is money the state shares with municipalities for basic operations, a savings that was then estimated of more than $400 million. He also recommended shutting down the Michigan Economic Development Corporation, a savings of $300 million, and ending the $280-million subsidy of the University of Michigan.

“This institution is large and rich enough to pay its own way,” LaFaive said of U-M.

How Michigan Compares in the Midwest

The share of income paid in 2012 in state and local taxes

Michigan: 9.4 percent

Indiana: 9.5 percent

Ohio: 9.8 percent

Minnesota: 10.8 percent

Illinois: 11 percent

Wisconsin: 11 percent

Source: The Tax Foundation

The case for more tax revenues

Ballard, though, said that higher taxes can mean greater investment in public services, community quality of life, higher education -- and, in the end, greater prosperity.

Proponents of this view say that states with the highest state and local taxes also rank among the highest in median household income and lowest in poverty. Conversely, they say, many states with low state and local tax rates are near the bottom in household income and near the top in poverty.

In 2014, New Jersey ranked second in the nation with median household income of nearly $72,000, while having the fourth lowest poverty rate of 11.1 percent. It also had the second highest state and local tax rate as a share of income.

Maryland had the highest median household income, at $73,971, while its poverty rate of 10.1 percent was second lowest. Its state and local tax rate was seventh highest in the nation.

Meanwhile, Mississippi was at the bottom in income, with median household income of under $40,000. It had the nation's highest poverty rate, at 21.5 percent. Its state and local tax rate as a share of income was 11th lowest in the nation.

Alabama ranked 47th in median household income at $42,830, while its poverty rate of 19.3 percent was fourth highest. Its state and local tax rate was tenth lowest in the nation.

As for his plan to eliminate the state income tax within five years, Sen. Brandenburg would not say for sure how lost revenue would be made up, telling Bridge: “Everything is on the table.”

He did float the prospect of an across-the-board spending freeze in all sectors of the budget to recoup money lost from income tax payments.

Brandenburg also conceded the sales tax might have to be hiked to make up some of the difference, but declined to give a percentage. In his view, hiking the sales tax would not be a great burden. “A sales tax (hike) is probably the least onerous way if you're going to put a tax on somebody,” he said.

About The Author

Ted Roelofs

Ted Roelofs is a Bridge contributor based in Grand Rapids. He can be reached here.

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Comments

Paul Jordan
Tue, 01/31/2017 - 10:13am

By now, we know--or perhaps ought to know--that cutting taxes does not stimulate economic growth. We have forty years of evidence to that effect, as if the example of Kansas were not enough.

Many Republicans have been embracing "alternate facts" for years in order to maintain their belief in what amounts to faith-based economics. It is our duty to help them back to reality, for all our sakes.

Rick
Tue, 01/31/2017 - 10:16am

The Michigan GOP - always ready to make our schools, roads and infrastructure worse with another sacrifice on the alter of austerity.

I guess the example of Kansas and so many other states (Wisconsin) just isn't convincing enough to the zealots.

Bookmagic
Tue, 01/31/2017 - 10:20am

Has the total State government gone mad! Cutting taxes, trickle down theory hasn't worked since Reagan. A family or a government can only cut expenses so much, revenue is IMPORTANT. The public has a right to basic services, good education, safety, and decent roads.

LF
Tue, 01/31/2017 - 10:36am

The challenge for government is to be good stewards of the citizen's money to create something better than we could create acting individually. It is NOT true that I could take the few thousand dollars I pay into the system each year thru my income taxes and create a better situation- I cannot fund good public schools with my money alone, I cannot repair the interstate highway near my house or the water main that breaks a county away.

"Taxes are the price we pay for civilization." Still true today. So, instead of trying to find a way to put a few hundred, or thousand, dollars back into the pockets of our citizens, how about we work on using the funds we receive as wisely as possible to improve the quality of civilization for everyone here in Michigan.

Mark Bjelland
Tue, 01/31/2017 - 10:50am

My question is why would we want to eliminate the state income tax. State government provides essential services that need to be funded and income taxes are fairer than sales taxes. We're right in the middle of the 50 states in state tax burden. So, what is the problem we are trying to fix here? The bigger problem in Michigan is the strained budgets of local governments like Flint. I'd like to see more local government aid from the state go to municipalities that are low in per capita tax capacity. If this income tax reduction proposal was tempered with fairness for lower-income residents of Michigan it would start by reducing the income tax rate to say 3% for the first $50,000 and raise it to 6% for income above $50,000.

Bob Balwinski
Tue, 01/31/2017 - 10:50am

I believe the MI budget is $55 "Billion" and not Million.

David waymire
Tue, 01/31/2017 - 11:41am

That's the total budget including federal funds. State spending from state resources is more like $34 billion. Fun fact. In 2000, the general fund was $10.5 billion. 15 years later it's $10.7 billion. No growth.

David Zeman
Tue, 01/31/2017 - 3:19pm

Bob, thank you so much. It has been fixed. 

 

 

 

Jim Fletcher
Tue, 01/31/2017 - 11:07am

The taxes that legislators in Lansing should be looking to reduce and eliminate are all forms of property taxes on residential homesteads and replace them with a consumption tax or other taxes. Residential property taxes on homeowners are far more regressive than income taxes. For fulltime residents that rent their home a provision could be made to lessen their burden through some form of tax credit.

The current property tax system does offer some help on the primary residency of homeowners but even when homeowners payoff their mortgages the current system effectively amounts to homeowners leasing their homes from the government. That is just un-American.

The taxing unfairness on the primary residence of homeowners has been even more negatively slanted with the ‘dark stores’ property tax assessments method that reduces tax rates on ‘big box’ stores and other commercial real estate that shifts the property tax burden to homeowners, farms, and other forms of property. The so-called dark stores property tax assessment approach that big retailers are using essentially contends that a new Meijer or Home Depot should only be assessed a property tax value at the worth the same as a boarded-up Kmart elsewhere in the city or township.

Now this dark stores property tax assessment approach is something the Michigan Legislature should make illegal along with reducing or eliminating property taxes on primary residential homesteads.

Bonnie
Tue, 01/31/2017 - 11:22am

I first came to Michigan back in the mid-1960s. Wow! What a state! I thought. Beautiful, progressive, bustling. I was excited to be there. In the early '70s, I married a wonderful man from Michigan and moved to the Detroit area. I was excited to be there. We stayed six months and moved on for my husband's work. We're back in the state now; he wants to be a snowbird. Personally, if I had my way, I'd be living in either CA or MA. I find Michigan has fallen way behind. Roads are terrible. People are unemployed. There is a sadness about the state now. I hope our government leaders can figure this out. Cutting taxes to the bone is not the way to go, IMO. When people vote on a tax it's because they know they're going to get something in exchange for their money: better schools for their children, better roads and transportation, parks and recreational venues, top-rated medical care and hospitals. People are attracted to bright, modern, progressive places. Keep that in mind in planning for the future.

Eric
Tue, 01/31/2017 - 11:34am

Glad I left Michigan

Terry
Tue, 01/31/2017 - 2:11pm

No one is going to like this suggestion, and it's only a suggestion... Legalize cannabis/weed/pot/grass or whatever you want to call it. What is the problem? Have we not paid any attention to Illinois, Colorado, Washington, California and a host of other states that are collecting a significant amount of tax revenues from legalization??

Reading this article and the fact that our state is even considering eliminating state tax at this time is mind blowing!!

George
Tue, 01/31/2017 - 11:45am

There is an old saying: "Even the Devil can quote scripture." You can find a study that supports every position held by every person. Why not look at what happens when you cut taxes/raise taxes? That is the real world. You could add Louisiana to the Kansas comparison. When the new governor came in, he discovered every single emergency fund had been drained to fund the tax cuts that were supposed to spur development. I will only add two examples to what was mentioned in the article.
First, California was in a huge financial crisis. They raised taxes on the wealthy and are now in the black AND passed France as the fifth largest economy in the world.
Second, Alabama. Alabama has extremely low property taxes and a sales tax of 3%. The poverty in the state is brutal. However, counties can get permission to raise the sales tax (they cannot raise any other taxes) and Baldwin County has a 9% sales tax. That tax is even on food and clothing. Baldwin county has the best hospitals, schools, roads, etc. in the entire State. And, in Gulf Shores, a city in Baldwin county, the sales tax is 10%. The voters just renewed that 1% additional tax to help fund their schools.
People understand something: you get what you pay for. Don't pay; you get nothing. Pay more (with good government) and you get something.

Jess
Sun, 02/05/2017 - 9:47am

According to your theory...all of our income should be confiscated by Gov't in order to create a utopian state. Really? How did that work out for Russia, China, Venezuela? The reality is that gov't has not spent the money we forked over to it very wisely....It has spent money on every progressive utopian idea that's come along...so where has that spending taken root and created anything ....????

Rick
Sun, 02/05/2017 - 2:45pm

I guess you're pleased to be paying for businesses to use our roads, education system, etc. and pay LESS over and over.

Businesses once contributed 15% of the state's revenue. Now it's under 1%. Guess who's making up the difference? You and I. You must be thrilled to support the DeVos and other billionaires so they can pay less and less and buy our complete legislature so they can pay NOTHING soon.

Lola Johnson
Tue, 01/31/2017 - 12:28pm

By now we should all be aware that the constitution of Michigan requires a balanced budget. In real terms, that means if you cut one tax, you must raise others. Let's face it, the services we have are not that great. cutting them will only bring Michigan closer to Mississippi and Kansas. So who will make up the difference in taxes? Seniors and low-income working people, just as they always do. Cut the EIC for working poor, eliminate the credit for gifts to public broadcasting and shelters, tax the pensions and whoa>>>>> just look at all the tax cuts we can give to big corporations. You cannot get blood out of a stone, and Michigan is fast becoming a stone. A bumpy, potholed, ill-educated stone.

Jess
Sun, 02/05/2017 - 9:54am

Excuse me, budgeting does not require a tit for tat taxation system...All that's required is to spend the money gov't is given wisely....and regardless of which tax we're talking about...the gov't has always managed to spend more than they were given...so taxation has become a bottomless pit..There is never going to be enough taxation because gov't representatives are simply spending "other people's money"and don't care how much of it they spend. The problem lies in the two party system which don't care how much they spend as long as they control the dollars so that they can become richer and even more powerful.

John
Tue, 01/31/2017 - 1:44pm

The Mackinac Center for Public Policy & the DeVos family have advocated policies destructive to the general welfare of the State of Michigan & it's residents for purely ideological reasons. They were behind the power grab use of emergency managers & undermined the referendum voted in by a majority of citizens to end that abuse. They are indirectly responsible for the lead poisoning of the people of Flint and the growth of unaccountable for profit charters schools in Detroit & elsewhere in the State. Reason & logic are irrelevant in the "alternate facts" world of puritan libertarian dogma so well articulated by the the Koch brothers funded Mackinaw center. They & the current crop of Michigan tea party republicans will do for us what Brownback did for Kansas & for no better reason then ideology & greed.

Bob Shaw
Tue, 01/31/2017 - 1:52pm

I am definitely against raising the sales tax to replace the income tax. Your figures indicate the lowest 80% of the population averages 4.6% of their income being paid out in sales tax. Nearly all of that is paid out in sales tax for essentials of life, food, rent, transportation, etc. They do not have money salted away if the sales tax was raised they find themselves in worse economic straits. The top 20% pays 2.1% in taxes now and have plenty of income to cover any increased sales tax, especially if their income tax is being reduced at the same time. It is ironic that those who make tax decisions only think of how those decisions affect them and not the other end of the spectrum.
As one who does not own a snowmobile or travel in the winter but instead volunteers to assist the poor in preparing their taxes through April 15, I see a lot of the other end. They simply cannot raise their economic level because of the job situation and their ages, primarily. The wealthy do not want to pay taxes and the poor cannot pay more to support the obligations of the state. How do you solve this condition?

Bob Shaw
Tue, 01/31/2017 - 1:56pm

“A sales tax (hike) is probably the least onerous way if you're going to put a tax on somebody,” he said.
It certainly is if you are not in the lower 80% of the wealth curve and you don't want to work very hard to solve the problem.

William C. Plumpe
Tue, 01/31/2017 - 3:00pm

But unless you actually do not replace the revenue caused by an ill advised income tax cut or elimination don't you just play a shell game switching from one tax to another or robbing another fund to make up the difference? And 1/3 of tax revenues is a whole lot of budget cutting to do that would leave the State budget eviscerated and programs like education, State Police and road repair to name a few hurting bad.

William C. Plumpe
Wed, 02/01/2017 - 3:28am

More thoughts.
Promising to cut taxes is always sure to get you attention particularly
if you are running for political office. Actually cutting taxes once you get
elected is much more difficult and can have a lot of negative after effects.
Better to concentrate on making sure taxes are fair and reasonable
because taxes are never going away as long as there is government and
revenues raised are spent in the most effective and efficient manner possible.
Remember what Ben Franklin the great statesman and patriot said:
"There are two things that are certain---death and taxes".

John S.
Tue, 01/31/2017 - 5:02pm

I'll trust Ballard's analysis of the Michigan economy that's based on ample evidence and sound analysis. Nobody should accept an argument (really just a story line) based upon selective evidence and political/economic ideology. The latter is not objective policy analysis. It's policy advocacy.

Kevin Grand
Tue, 01/31/2017 - 9:23pm

So if more taxes are the panacea that people like Mr. Roelofs are promoting, then why are states like Illinois and California about to go belly-up?

The problem with juicing your books with more tax revenue is that the people spending that money just cannot help themselves and stop. They'll always find an excuse to spend more and more of other people's money (usually to buy votes).

Locally speaking, that didn't end very well for Detroit, er I mean Michigan Taxpayers.

On the flip side, HB-4001 is a pathetic joke (1% reduction for over 40-years), and SB-4, while on a more acceptable timeframe, still leaves the door open for Michigan Taxpayers to get socked for even more taxes by playing around with the sales tax.

I cannot tell you how many people I have come across who have forgotten that Michigan Taxpayers have been shafted by Lansing multiple times without anything to show for it.

The recent gas tax & plate fee hike notwithstanding, Michigan Taxpayers were forced to pay a six-month "advance" on our summer property taxes back in the early 2000's with the promise that it would be paid back.

Well guess what? We're still waiting on that.

And those same people didn't realize that the Michigan Income Tax was hiked because of the actions of not only the democrats back in '07, but the republicans as well. Then Senate Majority Leader Mike Bishop allowed a "temporary" hike in the Michigan Income tax rate to go into effect, with the "understanding" it would be reduced at a future date.

When that date came around, Gov. Snyder reneged on that deal and kept the higher income tax rate in place in order to get his budget to balance after his business tax proposal was passed.

Most people also don't realize that the state budget has gone up just about every year Gov. Snyder has been in office.

Has your family budget?

If Lansing can "find" the money to increase its yearly budget, then a state budget freeze will be able to free up the bulk of what would be needed to cover eliminating the Michigan Income Tax. A proposal requiring Constitutional authority for all state appropriations will more than cover the rest.

All that is required to accomplish this, is the political will.

But are the republicans up to the task?

 

 

 

 

John
Wed, 02/01/2017 - 11:19am

Your "alternate facts" rant is undercut by two things, one is California which is not going belly up but actually is projected to have a budget surplus of approximately 10 billion dollars in 2017. The other is mentioned in another comment in this thread "In 2000, the general fund was $10.5 billion. 15 years later it's $10.7 billion" which when inflation is accounted for means basically no growth. Quoting the nonsense put out by the so called think tank The Mackinac Center for Public Policy doesn't make it any less fact based & no the people of the state of Michigan are not overtaxed including the wealthy religious libertarians on the west side of the state. When it comes to bankrupt tax cutting ideology there is no end to the misquotes and massaged "facts" used to turn state government into dysfunctional versions like Kansas. In the end only some of the short sighted wealthy & corporations benefit by destroying public institutions & shifting public services into the profit sector of the economy. Oh & the example of Detroit is a cheap shot which ignores the real & more complex reasons behind the decline of a once great American city.

Kevin Grand
Thu, 02/02/2017 - 6:32am

I'm sorry, John? But what were you saying about "alternative facts" again? That's an awful lot of red ink on Gov. Brown's chart for a state with a $10-B "surplus". I also noticed that you've side-stepped my point regarding how Lansing has spent the money it collected from Michigan Taxpayers, yet still looks for new ways in which to spend it. Revenue generated from sales tax hikes, property tax "advances" and gas taxes always seem to go by so quickly. If Lansing only focused on areas where it should be focused on, and did the same with those revenues, we wouldn't be having this problem. If you didn't misspend your limited resources on things like general fund dollars going towards sporting arenas in Detroit or gas tax revenue on mass transit, your budget would be in far better shape. And regarding Detroit, fiscal recklessness is fiscal recklessness no matter how you try and frame it. No one can spend more money than they take it. It just doesn't work in the long run.

D. Moore
Sun, 02/05/2017 - 4:58pm

WOW! Kevin, short memory. Granholm couldn't balance a budget, left us with an enormous deficit, 49th-ranked business economy in country, and the largest pace of out-bound migration in the country. Think about what THAT has to do with taxes. My graduation class in Hillsdale was 180; my nephew 72. At least we can keep our businesses and our citizens, which is the BIGGEST impact on taxes. I employ 95 people. My local payroll is over $5 million. Snyder has balanced every budget. Granholm 0 for 8. Snyder has submitted every budget on-time. Granholm 0 for 8. Our business climate and tax base has stabilized so we can even have a conversation like this. Imagine this type of dialogue during the lost decade. The beautiful thing about Snyder? He refuses to blame the person he succeeded. Leaders accept responsibility. Followers blame their predecessor. Relentless Positive Action.

Kevin Grand
Mon, 02/06/2017 - 1:01pm

D.Moore, so are you telling me that you found Gov. Snyder's actions perfectly acceptable for a "republican"? The Detroit bailout? The DPS bailout? The GWLA? Didn't the Michigan Republican Party once state that allowing Michigan Taxpayers to keep more of what they earned as one of their guiding principles? And if any of the above examples are what they are now teaching at Hillsdale, that institution has really strayed from what they once believed in.

D. Moore
Mon, 02/06/2017 - 3:20pm

Kevin, solid points. Don't agree with everything Snyder has done. I was referencing Hillsdale High School... All of the southern, "border" county communities are a fraction of their pre-Granholm population. Simply couldn't compete with pro-business Indiana and Ohio. Thank goodness for the Clemens pork processing facility coming to Coldwater. The business climate is much less hostile.

David Waymire
Wed, 02/08/2017 - 12:26pm

The reality is that rural counties across the nation are losing population as children and adults move out due to a loss of jobs (automation in the farm economy and in factories) and the trend for the best new jobs to be in knowledge based services located in major cities. This is happening as much in Indiana and Ohio as in Michigan. If you don't have a major city that attracts young talent -- the raw material for the knowledge industries -- your state will be less prosperous and older (as young people move). Hillsdale simply does not have what it takes to attract and retain young talent and good paying jobs in the world being created by the private sector. Sorry.

chester marx
Tue, 01/31/2017 - 10:53pm

we can't afford roads, we have a large amount of children living in poverty, our other infrastructure is crumbling, the state is taking $ from cities and now they propose to shift more taxes on the backs of the poor. Balance the budget, make the folks you cheated on UI whole, assist Flint, get rid of the EM law we voted AGAINST.

Lee W
Wed, 02/01/2017 - 8:12pm

"Michigan “is still taxed too much. We should be a leader in efficient government."

Let's become more efficient and prove it by watching our rainy day surplus increase while maintaining and improving our infrastructure THEN talk about decreasing any source of state income. We don't run our households by giving up a good paying job to pursue spending more to make us feel good. Funny how as our income increases, so do our bills. Same for the state.

We must become more efficient and prove our results before cutting any state income source, As much as I do not like to pay any taxes, I also realize we cannot obtain state service without paying for them. More services, more expenses, means greater taxes. A fact of life.

I am retired and on a fixed income but still use the roads, drink the water and rely on police and fire protection and other services provided by state and local governments.

We must all learn to live within our means - that is especially true of all forms of our government.

Bill Taylor
Wed, 02/01/2017 - 11:22pm

Since 40% of our State Budget is spent on Medicade, we need to research how other countries address caring for the elderly. Germany requires that children take financial responsibility for their parents.
The State will not have the resources to handel the pending aging baby boomer crisis.

Rick
Thu, 02/02/2017 - 9:28am

There is no such program as 'Medicade'.
If you're going to expound about a program at least get the name of the program right.
It's 'Medicaid' and the Feds pay 73% of the Medicaid bill in Michigan. It's a subsidy to us as the money is spent here. No Medicaid, much higher hospital and health insurance costs.
Fun fact: Business taxes were 15% of the total Michigan revenue in 1991, down to less than 5% in 2013 and now it’s 1% - YES - 1%. Now it's the middle class paying. And at the same time the Mi GOP cuts education FY 2001 to 2015 by -31%, revenue sharing -21% but corrections goes up 21%!
Talk about priorities.

Kevin Grand
Thu, 02/02/2017 - 2:05pm

And where exactly did those businesses get that money to pay those taxes in the first place?

Did it magically appear out of nowhere or did they collect it from their customers as part of doing business with them?

The reason governments likes to impose as many different types of taxes as they can, is so that the population is truly unaware of what they are actually paying in total for their government.

It also makes it easier to pit one group against another when it comes time to pay the bill.

Rick
Sun, 02/05/2017 - 2:47pm

How about some facts. Opinions aren't facts.

Kevin Grand
Mon, 02/06/2017 - 1:03pm

Do you really need me to give you a junior h.s. level course on how a business functions, Rick?

David Waymire
Wed, 02/08/2017 - 12:31pm

No, we don't. I'll let you know. My small business saw a $32,000 tax cut when the Michigan Business Tax was eliminated. My business still uses police and fire services from city -- but due to cuts in revenue sharing, there are fewer of those first responders. My business still relies on talented employees, but due to cuts to schools and higher education, those are a little harder to find. My business still needs good streets and roads. But they are shabbier every day, and we pay for broken tires/rims/windshields due to tax cuts. My business does better when young talented folks want to live in my city, Lansing, but we've cut out festivals and fun events that help attract those college grads. So the tax cut has not helped my business. It did put $16,000 in my pocket. A third of that went right to Washington in federal taxes. Most of the rest I spent on vacations in other states and goods purchased from places other than Michigan. In other words, this business tax cut did nothing but enrich me a little...at the expense of schools, first responders and quality of life.

John Saari
Sun, 02/05/2017 - 7:51am

You skewed the numbers. Use actual dollars instead of percentages. Use a Value Added Tax for all new taxes. Reduce other taxes, never eliminate. Use Pay-as-you-go in the exact amounts of the costs. Aim to break even.

Barry Visel
Sun, 02/05/2017 - 9:42am

Yet another piece about Michigan taxes without mention of the $30+Billion we don't collect each year because of tax credits, deductions and incentives.

Frank
Sun, 02/05/2017 - 11:16am

Business and many rich folks get all their money then pay taxes, working people pay income tax then get what's left over. A fundamental unfair and unconstitutional system.

No Income Tax at all for any business or individual. Instead a "transaction" fee collected on EVERY exchange of value. No protections of any kind including industrial processing or non profits or governmental units. No sin taxes or lottery or hotel taxes of any kind. No stadiums or subsidies for development (like self driving cars or movie production)

Government has too much control of our property and lives by way of the tax code.

Rich
Sun, 02/05/2017 - 12:37pm

The most unfair tax of all is the non-homestead property tax. It is unfair not so much in value, but by the fact that owners of non-homestead property can not vote for the items on a ballot that affect them which are the millage proposals. Giving up your homestead exemption automatically adds 18 mils to your property tax. It also puts you in the position of taxation without representation when all the extra millages are put on the ballot. In todays age when school district boundaries do not coincide with city or township boundaries, or even county boundaries, the clerks have no problem printing ballots for ones specific location. Why not just add homestead to that and let the people who are not homesteaded vote on what affects their pocketbook.

Matt
Sun, 02/05/2017 - 12:52pm

Not arguing for or against eliminating Michigan's state income tax, surprisingly I'm not sold on it. But almost every time I hear MSU Prof Ballard I want to find my diploma and burn it. Your article is exhibit A! Where does he get that if Flint had more money they wouldn't have poisoned their kids??? What gives any confidence if they had more money they'd spend it this way or that? The evidence for his contention is non existent. The fact is Flint, aside from 40 years of poor management, was stuck getting screwed over by Detroit for their water, when the EM came in, giving Flint access to funds to go ahead with a new water source, which without the expertise and other resources turned into the problems we saw. More accurately access to money, without expertise caused the Flint crisis, this is repeated over and over across Michigan and the country.
Second Bridge's editorial staff is so biased towards bigger and more expensive government that they are unable consider the most basic evidence. Here Roelof touts New Jersey and Maryland as high income, $70k, paradises due their high tax burdens. This without giving the slightest consideration to cost of living in these states vs MI. It takes at least $70 k in these locations to equal Michigan's $50! Not to mention Michigan doesn't have the benefit of being a suburb of New York or Washington DC,. Roelof's apparent unquestioning, biases and confidence in government's ability benefit mankind here are embarrassing.

D. Moore
Sun, 02/05/2017 - 5:09pm

Very well-stated. Flint needed Snyder to blame. They are a mirror of Chicago. Pre-EM, mayor and entire city council were dems. No fiscal responsibility. What is not discussed is that the Emergency Manager adopted the recommendations of the mayor, who resigned. Flint had been using Detroit water as a back-up resource for many years, the mayor recommended switching to Detroit as a cost-saving measure prior to his resignation. Flint's many decades of poor management -- supported by years of Granholm's incompetency (still waiting to be "blown away") -- finally resulted in bankruptcy, mayoral resignation, and incompetent city council and a governor and lieutenant governor willing to fix the problem. Chicago can't blame conservatives because there aren't any. Flint was in the same position for decades. Thank goodness Snyder showed-up. More money for Flint? Dems and Granholm worked on that for a long, long time. How did that turn out?