By Michael McPhee
White Lake Township resident
According to the Federation of Tax Administrators, 45 states have a business tax. Of them, Michigan has the third-lowest rate after being cut by our GOP administration. To replace revenue lost in the cut, Republicans pushed through a new tax on pensions by staging a divisive public debate that pitted pensioners against 401K participants and others having neither resource. Sponsors of the new tax said: “Everyone had to share the sacrifice and put some skin in the game.” But after all was said and done, it wasn’t just some retirees who got pinched for more money. Pension or no pension, our middle and lower income families all got skinned in the process.
In fact, households earning $15,000 to $54,000 pay almost 10 percent of their income to the state in various taxes, according to data from the Institute of Taxation and Economic Policy. Yet, the top 1 percent of households in the state earn $1.1 million on average and only 5 percent of that goes to the state. That equals $50,000 in tax breaks for them from the disparity built into the tax codes. Most of the inequity can be attributed to our flat-rate income tax system which is rarely used elsewhere. Nearly all other states use a “graduated rate,” as does the IRS.
The curious presence of this large loophole after our tax codes were scoured for additional revenue reveals the hidden hand of the wealthy GOP contributors at work. They’re the very same entrepreneurs and executives who pushed for a business tax reduction to launch the reform. As a result, they now get one big tax break on top of another, even though school funding and other vital services are being scaled back.
“To whom much is given, much is expected” is a noble tenet that guides many privileged people toward service in the common interest. But here, the term seems largely relegated to political contributions. Perhaps our state motto should read: “Quid pro quo” or “This for that” to reflect the attitude in Lansing these days. As we’ve seen, they’ll even spin a yarn to make a deal.
The tax reform was never about the recovery of our great state because the GOP has no intention of ever restoring services and funding to previous levels. And it surely wasn’t about fairness either when tax breaks for the upper crust doubled. The tax reform was simply a “return on investment” for wealthy contributors who funded (Gov. Rick) Snyder’s campaign. It’s time to set this right; it’s time to recall Snyder and Co. from office, and then hit the resent button on tax reform again.