Much More, so that Businesses Can Pay Much Less
Michigan Governor Rick Snyder has taken a lot of heat for his budget plan over the last week or so, and for very good reason. Snyder is currently seeking to raise individual income taxes â€” primarily on elderly and poor Michiganders â€” by some $1.7 billion per year. Rather than using this money to help close the stateâ€™s budget deficit, Snyder is asking some of Michiganâ€™s most vulnerable families to hand all this money over to businesses, in the form of a roughly $1.8 billion business tax cut.
Snyder would like to replace the stateâ€™s much maligned Michigan Business Tax (MBT) â€” a sort of hybrid between a corporate income tax and a sales tax â€” with a true corporate income tax. The basic idea isnâ€™t necessarily a bad one, but the corporate income tax Snyder has in mind is much too modest. Overall, the swap would raise $1.8 billion less per year than current law.
In order to make up this difference during such tight budgetary times, Snyder has proposed a variety of personal income tax increases on Michigan families. The most notable increases include eliminating the stateâ€™s generous pension tax breaks (a change opposed by 53% of state residents) and scrapping the stateâ€™s Earned Income Tax Credit (EITC) (a change opposed by 58% of the state). Snyder is also seeking to eliminate extra exemptions available to elderly taxpayers and families with children.
Overall, the Michigan League for Human Services (MILHS) found that individual income tax bills would rise by 31% under Snyderâ€™s plan, while the stateâ€™s businesses would receive a staggering 86% tax cut. So much for shared sacrifice.