Political News and Commentary with the Right Perspective. NAVIGATION
  • Front Page
  • News
  • Multimedia
  • Tags
  • RSS Feed

  • Advertise on RightMichigan.com


    Get the RightMighigan.com toolbar!



    Who are the NERD fund donors Mr Snyder?

    Raise the curtain.

    Surprise - I like it.

    By JGillman, Section News
    Posted on Sun May 15, 2011 at 07:17:49 PM EST
    Tags: Michigan, Taxes, MBT, Seniors, Pensions, Tapping school pensions, fairness, Manufacturing, small Business, Growth, Obligations, Brian Calley, Lansing (all tags)

    Its time I weigh in.

    Not that my opinion is any more valid than those of you who have posted on this already.  In fact I have carefully considered the arguments, and added in the known variables along with best guesses and personal experience.  I rely on your observations as much as my own, however this is one of those times I must respectfully disagree with some of you on the negative impact of the state's new tax policy.

    Last night I was lucky enough to attend the Leelanau County Republican party Lincoln dinner with my wife and a great number of friends. Some of those friends are either retired and/or retiring soon, and have a reason to be concerned about higher taxes, the loss of exemptions, and changing tax policy that may directly affect them.  There was no shortage of Republicans present, and many of those were folks one would find in 912 groups, Tea Parties, and other constitution interested organizations.

    I believe the Leelanau county chair suggested the numbers involved in the county party were even more than last year.  And last year we had great success in moving the bar back toward conservative government structure with landslide elections both statewide and nationally.

    The reason I mention this, is to establish that this group, even while containing a number of "old guard" party types, it was hardly a pushover crowd.  While being a social affair, there is/was still an undeniable no-going-back attitude, and frankly there were enough who had a concern as do many in this forum, that this was not the way to start off.

    For the most part, I too could be counted as one who was also troubled about extending tax levels, and elimination of particular exemptions.  My understanding of the MBT going away and the Corporate tax replacement was not yet complete.

    ~ More below ~

    Sometimes a catalyst is required.

    The speaker for the event, none other than our second executive, Brian Calley, was to be speaking on the newly changed policy.  Mr Calley, being quite literate on the subject, presented the state of the state as well as one could expect out of a majorly planned event in Lansing featuring our executive placeholder.  His presentation reminded us of how a state that cannot legally accumulate debt has been doing so.  His message that we are saddled with obligations though technically not as a result of borrowed money, are still as real and binding.

    In fact I had forgotten talking about those realities here and at MTTM over the last few years until he made it clear that it was being addressed while at the same time reducing the overall tax load, and balancing some of the burden more appropriately.  Capital expense costs that are amortized yet not considered borrowed, unemployment money in the billions of dollars that MUST be paid back (thank you for the 99 weeks suckers), and a school pension and benefits liability that is unfunded as yet to the tune of about $40 billion smackers.

    His statement was that as a banker, (his profession) and having someone walking in with obligations of $60,000,000,000.00, and showing an income of $8,000,000,000.00 he would have to show them the door.

    Yet here we are.

    And cutting across the board is not even possible ... yet.

    The change on taxing of pensions (and retirement benefits if I am reading the legislation correctly)  will tap some of those liabilities which are frankly in high dollar housholds.  Households that while having aggressively higher income levels would not according to the old tax code be paying any taxes while other Michigan families making half would still pay.  Many will still NOT as this is phased in, but those 50 and younger can expect it to matter, at least a little.  Its not even very much.

    And by the time the dust is settled, Michiganders will continue to pay 4.35% a while longer, and the seniors who are the largest growing demographic in the state will still have the 8th most favorable tax environment to retire in.   But at least we are setting up a mechanism to pay for a part of that obligation.

    But the only way to move forward and complete the ability to pay as the Lt. Guv explained, is to grow our economy back.

    So then there is the business tax aspect.

    Lt. Governor Calley made a very important thing known with regard to business statistics.  Michigan Job growth in the 90s was all about local (state) business.  Michigan Job retention in the 2000s was all about local business.  The efforts to attract new start ups for the last 20 years was a failure.  The money to pay for that failure came from (guess who) local business.  Local business owners were asked to pony up and pay for the government trying to create a new (insert capitol of -----  here), because we like being the automotive capitol etc..

    Small business however, could not grow while paying taxes twice.

    I can personally attest to this.  Having made only a barely taxable personal income from our business this year, it is especially hard to write the check for simply the volume of business mark up as is done with the MBT, and THEN have the privilege of paying on the NET in personal taxes.

    I cannot even imagine the harsh reality for small manufacturers in this state who have a much higher value added component to their product than my own.  Add to this, the wages paid to employees included in the MBT calculations, and the punishment abounded with the MBT.  The MBT, and its predecessor the SBT punished small business for simply having the gall to be located in Michigan.

    Its amazing we have anyone making anything in this state anymore.  God bless those who stuck around.  Sympathy for those who have left.

    I, and thousands of manufacturers will now pay only ONCE at tax time.  How is that not good?

    I'll tell you how its not good.

    It's not good if we don't understand what changes are being made.
    Its not good if we don't have all the facts on where we were.
    Its not good if we are fed half truths by those who have a personal stake in one side of the other.

    The proper or GOOD solution is relative to a complete understanding of the problem, of what problems exists, and how best to apply fair responsibility to the solution.

    You all know I am not a fan of taxes.  But I am supportive of meeting obligations, even when those obligations were made by those in charge before.  And the way in which these are met will necessarily involve some serious moving of the cheese in Lansing.  I have withheld major commentary on this issue, because I felt I did not have enough knowledge of the big picture.   Even now I am putting on the flame retardant suit, just in case.

    I must give credit to Michigan's Lt. Governor Brian Calley for his ability to fill in the blanks.  He did a worthy job, and made perfect sense in his presentation.  If there was anyone in the crowd last night who didn't yet understand by the end of his speech, I would be surprised. In fact, as a person who normally carries the video equipment to everything, I am now chastising myself for not doing so this time, and capturing one of the best explanations I have seen to use in this forum.

    This tax policy change, in my opinion is the most appropriate way in which this could have been handled.

    Its a surprisingly good tax package, and is worthy of support.

    < And Since We Brought It Up | And Part Of The Reason We Are In Trouble >

    Share This: Digg! StumbleUpon del.icio.us reddit reddit

    Display: Sort:
    I am somewhat (none / 0) (#1)
    by grannynanny on Sun May 15, 2011 at 08:28:28 PM EST
    luke warm to his explanation BUT.....what about the way the current administration is handling the freebies given away right now???  This state CANNOT afford the crap it gives away and it CANNOT afford to pick winners and losers with it's programs intended for attracting business.

    They are going to tax the pensions, spend the money foolishly and let what is left of the residents of this state wither away.

    I don't trust any of them - hell look what Gingrich said today - "We must all support and pay for healthcare".  I thought he was running as a RINO, instead he is cozying up to be Zero's new running mate.

    I am increasingly very wary of anyone with an R behind their name.  

    Sure glad the economy isn't bleeding because (none / 0) (#8)
    by maidintheus on Mon May 16, 2011 at 09:20:45 AM EST
    I always think you should stop the bleeding asap...even though the victim retains a scar. But what do I know, 2+2 still = 4 at my little house.

    But maybe they do need to get eased off the dope :O

    And that's all I can say without going Corinthian Scales on ya.

    What He said: (none / 0) (#12)
    by Atwater on Mon May 16, 2011 at 03:41:36 PM EST
    I rise this afternoon to speak on House Bill No. 4361 and the discussion that happened this afternoon. As you know, I voted against House Bill No. 4361. I did not come to this decision lightly. Let me begin my statement by saying for the record that which is already known. I opposed the passage of the MBT as a member of the House, and I strongly supported the repeal of the Michigan business tax just as I supported the repeal of the single business tax which it replaced.

    I supported the Governor's corporate tax plan for the simplification it brings in the reduction in taxes on Michigan's job providers. Since we began this debate over the tax proposal, I have continuously argued for the business tax cut and against the imposition of the income tax on pensioners and retirement income. I opposed the scheduled interruption of the scheduled reduction of the income tax rate. These are clear and distinct issues and should have been treated as such.

    After the 30-plus-year nightmare of both the single business tax and the Michigan business tax, can anyone really argue that its elimination and replacement doesn't have the merit to stand alone as its own issue? I understand that arguments have been made regarding fairness and shared sacrifice as justification for tax increases that were part of this package.

    However, my experience teaches me that here in Lansing, a rationale can always be found for raising taxes on some or all of Michigan's taxpayers. I remind my colleagues that within the last few years, we have seen income tax increases, cigarette tax increases, liquor tax increases, and business tax increases. The MBT itself was a tax increase above the SBT, and the surcharge was an insult added on top of the injury that was provided here.

    All of these tax increases took place over my objection, I would point out, and I believe that state government has been living off the shared sacrifices that these tax increases represent for all of the last eight years. Now there has been a very refreshing change in the occupancy of the Governor's office. However, I am concerned that the culture in Lansing here has not changed as well. Governor Snyder has advanced a strong reform agenda in all areas of state government, and I believe he is correct to do so.

    We Senate Republicans have argued for reforms first. His efforts in all these areas have my support. I am concerned, however, that the inclusion of a pension tax increase and the interruption in the income tax cut will embolden those in opposition to his reform agenda and make the advanced reform agenda more difficult.

    I do believe that we should move on reform measures before we moved on the budget because ultimately the greatest mechanism that we have enforcing change is the power of the purse strings, and one should come before the other. We must never forget that the power to tax is the most potent power that we have.

    The tax dollars that we spend here in this town routinely represent the production hours, days, weeks, and years of our constituents' lives, and that fact has never been too far from my mind.

    I have always believed the real courage and real leadership comes in finding solutions to policy questions without imposing new or additional taxes on our constituency.

    -- State Senator Dave Robertson  no vote explanation

    If anybody on here knows him, thank him.  He nailed it.

    Speech transcript? (none / 0) (#15)
    by somercet on Tue May 17, 2011 at 10:46:36 PM EST
    Mr Gilman;

    Is there a transcript of the speech, or links to position papers that accurately reflect the Lt. Governor's positions?
    Though nothing is wasted, everything is spent. -- Annie Dillard

    Display: Sort:


    Make a new account

    Tweet along with RightMichigan by
    following us on Twitter HERE!

    Related Links

    + Also by JGillman
    create account | faq | search