The New Group, Business Leaders for
I congratulate the new group, Business Leaders for
The legislature is now wrestling with the current budget crisis caused by declining tax revenue due to
Had the state relied more heavily on a broader retail sales tax, historically a much more stable revenue source, the loss in state revenues would have been much smaller. Looking at only the General Fund-General Purpose (GF-GP) portion of the state budget (about 1/3 of the total state budget), state GF-GP revenues would have been $1.2 billion more. This is because total 2009 GF-GP revenues declined by 20.6% from 2008, whereas, sales tax revenue declined by only 8.3% during the same period.*
There is a proposal to switch from the state income tax and Michigan Business Tax (MBT) to a broad retail sales tax called the MI FairTax. Not only would it provide a more stable revenue source for the funding of state government, it would give
By removing state taxes from the prices of
While it is a good thing that these top business leaders have joined together to remove 60% of the MBT, their proposal still perpetuates the deception that businesses pay taxes, continues to hide taxes from the public in prices and does little to reduce tax compliance cost. It also leaves in place the state income tax which punishes productive behavior (work, savings, investing, etc.) by taxing such behavior.
The MI FairTax replaces
The MI FairTax may be more difficult to enact as it requires a constitutional amendment to raise the sales tax rate, but it will then constitutionally provide better representation and protection to the people. The current buying and selling of tax favors between special interests and legislators, that today corrupts our representative form of government, will cease and our elected representatives will once again be responsible to citizens rather than lobbyists. The MI FairTax will also constitutionally prohibit the reintroduction of the income tax and the MBT and the introduction of any new state tax or increase of the FairTax rate without a vote of the people.
Legislated reforms, like those proposed by these well intentioned business leaders, can easily be reversed by future trade in tax favors between lobbyists and elected officials, and citizens will once again be under represented.
No other proposal will do more to attract companies and jobs to
* May, 2009 Consensus Revenue Agreement published by the Michigan Department of Treasury
P.O. Box 141 / 5620 Clato St.
Kalamazoo, MI 49004
phone/fax: (269) 345-0950
cell: (586) 530-3298
By Peter Luke
November 22, 2009, 12:00AM
Construction company head John Rakolta has a message for those candidates seeking election next year:
Unless you can specifically detail how half of the 850,000 jobs lost so far this decade can be replaced in four years, don't even bother. Because in a state with the nation's highest unemployment rate, your campaign won't have any credibility.
Last week's House hearing by industry proponents of Michigan's tax credit program for film production morphed into broader concerns that a dysfunctional political climate all but guarantees predictions that the state will take decades to economically recover.
Rakolta is CEO of Walbridge Aldinger Co., the firm that will build the $76 million project to turn a GM complex in Pontiac into film production studios that would employ 3,600 and provide some 500 construction jobs.
Given continued complaints about the credits and a Senate-passed bill that would reduce their value, project backers aren't sure Michigan is prepared to hold up its end of the deal.
Rakolta says the business climate is "toxic" right now because distrusting investors see Michigan not as "a state of cohesion," but a "state of contention."
"The only thing Lansing should be focusing on is jobs, jobs and more jobs," he said. "Nothing good can happen in this state until we return to full employment."
Since it's not that complicated, it shouldn't be so hard.
In fiscal year 2009, the Michigan Economic Development Corporation spent $30 million in one-time money on its award-winning "Pure Michigan" tourism campaign, including a first-ever national cable television ad buy that received plaudits across the country.
Lawmakers knew when they appropriated the money that they'd have to replace it with a permanent funding source in FY 2010. A leisure and hospitality industry that employs nearly 400,000 is counting on lawmakers to grasp a basic fact of marketing: A brand that doesn't receive sustained support will wither, thus wasting the investment made to build it in the first place.
Instead a whole year has been wasted because lawmakers haven't passed the one funding solution on the table, earmarking tourism-related sales tax revenue. A proposed fee on airport car rentals died because even taxing out-of-state visitors to support jobs for Michigan residents is politically impossible.
So lawmakers have chopped the ad budget by 80 percent to $5.7 million. State tourism officials promptly canceled a planned campaign to promote winter tourism and announced that most of the summer campaign could be scrapped as well.
A year ago, a bipartisan panel reported that while Michigan's infrastructure was on the road to ruin, tens of thousands of jobs could be created by, yes, raising gas taxes and registration fees.
The timing of the report, issued on the eve of a 2009 non-election year, was supposed to spur lawmakers to action. Aside from a couple of hearings, nothing has happened. And it's uncertain anything will, even to avoid the expected loss of $600 million in federal highway funding because lawmakers can't raise the money to match it.
Federal highway dollars instead would go to states like Illinois, where state officials last week embraced the possibility of selling a mothballed prison to house convicted and detained terrorists now being held in Guantanamo Bay, Cuba.
Since federal authorities toured the now-closed Michigan prison in Standish in July, U.S. Rep. Peter Hoekstra, R-Holland, stoked his gubernatorial campaign with his opposition to it. Granholm, predictably cautious, hasn't lobbied for it.
Illinois' Democratic Gov. Pat Quinn last week, however, wholeheartedly endorsed a project his administration estimated would mean a $1 billion investment and 3,000 jobs.
Jim Sacia, a Republican Illinois House member who represents the northwestern Illinois town where the prison is located, and the unemployment rate is high, told the Huffington Post:
"If we lose this opportunity, all I can think of is we literally are idiots. I mean that sincerely."
Enough said.
E-mail Peter Luke: pluke@boothmichigan.com
***
total 2009 GF-GP revenues declined by 20.6% from 2008, whereas, sales tax revenue declined by only 8.3% during the same period.
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