As expected, Governor Jennifer Granholm has widened her search for additional tax revenue in this year’s budget. Last week, she floated hikes in both the cigarette and beer tax, but this week the proposal became even clearer – and much worse.
Granholm is now in discussions with legislative leaders and pushing a $685 million tax hike package that would target bottled water, tobacco products, and sporting events, while also lowering or phasing out a number of credits for low-income residents, the film industry, and other businesses.
As an apparent concession, Granholm would phase out her punitive and ill-conceived Michigan Business Tax Surcharge enacted at the end of 2007 that pushed the tax rate on businesses from 4.95% to over 6 percent. But, don’t get too excited if you’re an employer or employee in Michigan: the phase-out will start two years from now and take an additional 3 years to fully vanish. Until then, Michigan’s struggling businesses will have to deal with the higher tax by lowering wages or contributing to the state’s massive 15.2% unemployment rate.
As for further details on Granholm’s tax hike package, the governor’s spokeswoman said the following:
The governor and legislative leaders have agreed to not to negotiate in public and we’re sticking to that agreement.
Translation: this budget will be written completely behind closed doors and the public has no right to know what we fully intend to do to increase the tax burden on Michiganders.
In the meantime, tax collections from the Michigan Business Tax in July were down over 19 percent from last year and income tax collections are down nearly 20 percent this year. This is largely the result of a high tax structure that causes businesses to shut down or lay off employees, contributing to the unacceptable 15.2 percent unemployment rate and less income being generated in the state.
Michigan also has one of the highest outflows of residents of any state, having lost over 419,000 residents in the past ten years at an exponentially growing rate. Even worse, these residents took $9.5 billion in taxable income with them.
So if you’re one of the last remaining Michigan residents who decided not to flee the state when you lost your job or shut down your business, hold on tight – because with Governor Granholm in the driver’s seat, this ride is about to get even wilder
CLICK HERE to write the governor and your legislators to tell them taxes in Michigan are high enough already. Also, click here for ATR’s letter to the Michigan legislature.
(photo by mic stolz)