Sunday, May 01, 2011

Time to call the State Senate to stop the Snyder tax increases

I'm really disappointed in my party right now, including with many of those I know quite well and respect. I expect crap from Rick Snyder. I'm not disappointed with him. I had no expectations of him, and didn't even vote for him in neither the primary, nor the general election. It was the first race ever where I didn't vote for a Republican at the top of the ticket, going back to my days before I was a Republican and often split my ticket 60-40. I went 3rd party last November as a protest against Snyder's vagueness, refusal to declare stances, associations (which is how I suspected him to be liberal), and his support for anti-life proposition 2. The fact that I'm actually fed up to the point where I'm posting this publicly says a lot about my concerns. These Granholmesque policies are going to kill us as a state, not to mention the credibility of my party. If Granholm is the Matt Millen of Governors, Snyder's on his way of being the John L "The coaches are screwing it up" Smith.

While I expect liberal policies from Snyder, I don't expect blind following or at best a compromise-lite plan of his plan. Bad policy is bad politics. Doing something solely for the sake of doing something is bad policy. Government that put itself in a bad position and getting bailed out by taxpayers is bad policy. The legislature's job isn't to follow leaders. The legislature's job is to represent the districts and BE leaders for the district. That means telling Snyder "I'm in charge, not you" when his policy is bad, or "This is good policy, I'll support it." when it's good. Unfortunately, this policy absolutely sucks as bad as Granholm's tenure. Here's my question to the legislators. If Virg Bernero won and came up with this plan, would you vote for it? If Granholm pushed this, would you vote for it? I know that answer, and it would be the right one. Hell, no! That's the answer that should have been given to the supposed "republican," Rick Snyder. "Hell, No" followed by a push for an amendment to actually "reinvent Michigan" as Snyder says, and go after the 80% of the budget that isn't going to be touched with this plan.

From the Free Press

Gov. Rick Snyder, relying entirely on the votes of fellow Republicans, won narrow approval for his sweeping overhaul of Michigan's business and income taxes Thursday, setting the stage for a final, and possibly more difficult, battle in the Senate.

The Snyder proposal -- swapping out the current Michigan Business Tax for a much smaller corporate income tax and eliminating a host of tax exemptions and credits, including Michigan film incentives -- squeaked through the House, 56-53, the bare minimum needed. Six Republicans and every Democrat voted against it.

Backers of the package, which cuts net business taxes more than 80%, or $1.7 billion, said it would make Michigan a better place to do business and create jobs. Opponents decried the loss of income tax exemptions for most pension income and the elimination of most of a tax credit that provides extra income to people who are working but poor. They said it shifted the tax burden from business owners to poor and elderly people.

House Speaker Jase Bolger, R-Marshall, said the House's GOP majority -- the first since 2006 -- was "elected to make change. This is a turnaround moment for the state."

The Snyder tax plan would result in a $350-million tax on currently exempt pension income in 2013 and delay for a year a scheduled income tax rate cut that would cost taxpayers $213 million. In total, income tax revenue would rise nearly $1.5 billion in 2013, nearly as much as business tax collections would decline.

You gotta be kidding me. I expect better from the state house. This is a gimmick tax and spend measure like what Granholm pushed. Approximately 80% of the budget isn't even touched. All these tax increases and shifts are over a 20% portion of the budget since the rest is not considered "discretionary" due to state constitutional or federal concerns. The state should tell the feds to screw off, and amend the state constitution so we can have real line-by-line expenditure reform to adjust to the recessions. Nobody is doing that. It's the same fight we've had every single year with tax increases, tax shifts, creative accounting, declining revenues and until the last two years or so, increased spending.

I'll be calling Joe Hune's office Monday. I suggest all those opposed to this do the same and call their state senator and have them shoot this down. This can give our friends in the house a chance to give themselves a mulligan. If you want reform, go after more than just the so called discretionary budget. No more tax increases. No more gimmicks.

I'd like to add my thanks to Reps. Anthony Forlini, Ken Goike, Pat Somerville, Rick Outman, Pete Lund, and Andrea LaFontaine for doing the right thing and voting no.


Daniel said...

I'm amazed that you think this is a tax increase. All the revenue estimates I've seen show that the revenue loss from repealing the MBT and replacing it with the corporate income tax are greater than the increases in the individual income tax system. Even the Free Press article you cite makes it clear that the cuts are larger than the increases.

I would also point out that many of the "tax increases" consist of repealing or at least reducing refundable tax credits that cause people with zero tax liabilities to get refunds. For example, under the Homestead Property Tax and Earned Income credits many people who pay nothing in income tax get checks from the state every year. Reducing these credits is really more like cutting welfare spending.

And Snyder's budget really does propose cuts. He is proposing cutting the per child foundation allowance amount by hundreds of dollars. This amount never decreased under Granholm or even Engler. I really don't get the comparison to Granholm at all. Snyder is clearly a critic of her film industry subsidies.

And it needs to be said that the reforms create a much fairer and simpler tax system in Michigan. Currently owners of S Corps and LLCs pay 4.35% individual income tax on the profit from their companies. They simultaneously have to pay the insanely complicated MBT on the same income every year. Under the Snyder reforms S Corps and LLCs won't even have to fill out an MBT or corporate income tax return. Plus under the corporate income tax (which only C Corps will have to pay) all of the confusing MBT credits that favor one industry or company over another are eliminated.

I'm not a blind follower of the Governor. I voted for Mike Cox in the primary partly because of some of the same concerns you had about Snyder's lack of track record. But he has been a pleasant surprise so far and his tax and spending reforms are definitely to the right of John Engler.

Republican Michigander said...

If an individual directly or indirectly (business) has to pay more to the government than was otherwise the case before, it's a tax increase. "Reversing" tax cuts already passed is a tax increase. More money from individuals goes to government which has proven it does not property spend the money.

We've had fee increases in early-mid 2000's. We then had tax "shifts" with property tax collections. Then there was two penny Jenny and the income tax increase, along with the SBT/MBT bad to worse replacement. Now there's yet another tax increase on individuals. More money to government. Less money to people.

If this was a simple MBT repeal replaced with a C-corp flat tax, I wouldn't complain. (And I'm well aware of the pass through liability) That doesn't pick winners or losers and replaces one business tax with another. Personally, I'd rather see MBT repeal without a replacement. I'd accept the latter without firing off. Giving business a break is good, but not when the individuals are being punished in its place. Give them both a break.

The flim subsidies is a contentious issue, but small potatoes in the grand scheme of things, but there's a side point to that. While I oppose it as a pick winners/losers issue, it shows that lower taxes brings businesses in and creates jobs. Taxing pensions in a snowbird state will cause a lot of new Floridian permanent residencies and hurt us, especially those up north.

What's worse of all is that this whole tax and spending argument is once again, over only approximately 20% of the entire budget - the "discretionary" funds. There's no way there will be real reforms long term if 80% of the budget isn't going to be touched.

Amend the constitution if it's protected. Look at the entire thing. Eliminate what isn't needed. Reduce what's necessary. Else, we'll be repeating this in another two years, with a new tax/fee and spend gimmick.