Letters

Letters 08-24-2015

Bush And Blame Jeb Bush strikes again. Understand that Bush III represents the nearly extinct, compassionate-conservative, moderate wing of the Republican party...

No More State Theatre I was quite surprised and disgusted by an article I saw in last week’s edition. On pages 18 and 19 was an article about how the State Theatre downtown let some homosexual couple get married there...

GMOs Unsustainable Steve Tuttle’s column on GMOs was both uninformed and off the mark. Genetic engineering will not feed the world like Tuttle claims. However, GMOs do have the potential to starve us because they are unsustainable...

A Pin Drop Senator Debbie Stabenow spoke on August 14 to a group of Democrats in Charlevoix, an all-white, seemingly middle class, well-educated audience, half of whom were female...

A Slippery Slope Most of us would agree that an appropriate suggestion to a physician who refuses to provide a blood transfusion to a dying patient because of the doctor’s religious views would be, “Please doctor, change your profession as a less selfish means of protecting your religious freedom.”

Stabilize Our Climate Climate scientists have been saying that in order to stabilize the climate, we need to limit global warming to less than two degrees. Renewables other than hydropower provide less than 3 percent of the world energy. In order to achieve the two degree scenario, the world needs to generate 11 times more wind power by 2050, and 36 times more solar power. It will require a big helping of new nuclear power, too...

Harm From GMOs I usually agree with the well-reasoned opinions expressed in Stephen Tuttle’s columns but I must challenge his assertions concerning GMO foods. As many proponents of GMOs do, Mr. Tuttle conveniently ignores the basic fact that GMO corn, soybeans and other crops have been engineered to withstand massive quantities of herbicides. This strategy is designed to maximize profits for chemical companies, such as Monsanto. The use of copious quantities of herbicides, including glyphosates, is losing its effectiveness and the producers of these poisons are promoting the use of increasingly dangerous substances to achieve the same results...

Home · Articles · News · Other Opinions · From worst to first......
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From worst to first... the best business tax is none

Kenneth M. Braun - February 1st, 2007
Michigan’s Single Business Tax (SBT) is America’s worst state corporate tax, according to the Tax Foundation. Fortunately, this job killer will expire on Dec. 31, 2007. Many politicians believe that we must craft a replacement tax because they claim the government cannot do without the $1.9 billion in SBT revenue.
But if the SBT dies and politicians fail to approve a new tax, we will join three other states that the Tax Foundation says do not have any general corporate tax. Judging from what has been happening to those and other states at the top of the Tax Foundation’s corporate tax ranking, our politicians should consider “failure” an option.
Michigan’s historical high-water mark for jobs was April 2000. From then until October 2006, the number of jobs in the United States (excluding Michigan) increased 6.8 percent. Michigan lost more than 207,000 jobs in those six years — a decline of 4.2 percent, while the five states ranked by the Tax Foundation as having the lowest general corporate taxes have increased their job total by 14.3 percent. The three states that have no general corporate tax at all combined for a 17.6 percent job growth, according to the U.S. Labor Department.
What if Michigan had eliminated the SBT six years ago, and had added jobs at a pace comparable to the other 49 states? In this hypothetical, Michigan would now have an additional 545,000 jobs. Assuming that state income and sales tax collection per job had remained constant, just these two taxes would today bring in an additional $1.6 billion in state revenue per year — nearly all of what is now brought in by the SBT. Even more striking, if our job growth had paced the three states that have no general corporate tax at all, then the additional income and sales taxes would be more than $3.2 billion — making up all of the “lost” SBT revenue and tacking on an extra $1.3 billion.
We cannot know for certain what would have happened to Michigan if its tax structure had been different. But remember that the calculation above considers only the additional income and sales taxes from those extra jobs. It does not account for a potential increase in the billions of dollars now collected for property and real estate taxes, “sin” taxes, motor fuel taxes, insurance taxes, licenses, fees and other sources of revenue. Unless those half-million to 1 million extra workers were all homeless and didn’t drink, smoke, gamble, drive or buy insurance, it is quite possible that the increased revenue estimates above are
conservative.
Admittedly, Michigan’s economy did well in the late 1990s, even with the SBT in place. But given the magnitude and persistence of Michigan’s current problems, this is a tax that we can do without. For every dollar that employers must pay in corporate taxes to the state, they have one dollar less to disburse as wages to workers or as investment in growth. It is perhaps no surprise that the state with the worst corporate tax is losing the most jobs, while the rest of the nation is rapidly creating them.
Returning Michigan job growth to the national average or better will not happen overnight, regardless of what the tax changes may be. A trimming of expenses will be necessary, and here it is important to bear in mind that the SBT only accounts for about five percent of the total state budget.
Michigan businesses have cut back their budgets during this prolonged one-state recession, and state government has cost-cutting that can still be done. An audit of public school health insurance purchasing revealed reforms that could save $200 million to $400 million each year. Another $40 million could be saved annually if Michigan joined other states that impose a lifetime limit of four years for welfare benefits (as opposed to recent legislation that appears to impose this limit, but grants a multitude of exceptions). These and other common-sense reforms should be used to “pay” for the current budget deficit and any SBT revenue that is “lost” in the short run.
Nearly all of the plans that have been proposed to replace the SBT with other taxes come with assurances that they will provide tax relief for some Michigan businesses (though often at the expense of tax hikes for others). There is thus a bipartisan understanding that tax cuts create jobs. The politicians need to take the logical next step in their thinking and realize that all of Michigan’s job providers need tax relief. Replacing the SBT with nothing is a reasonable option. For Michigan to succeed, policymakers should dare to “fail.”

Kenneth M. Braun is a policy analyst specializing in fiscal and budgetary issues for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland.
 
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