Essay: Taxing Questions - 8/2/06

Nobody likes taxes, including me. I also do not like going to the dentist, getting medical tests, or paying for new brakes for my car. But those are all part of the price we all gladly pay in return for living in a modern civilized society. We have to pay taxes to fix the roads, run our prisons, and educate our children.

But while I cheerfully reserve my right to complain about taxes, I am also basically a conservative, not an anarchist. And that is why I really don’t like the idea of repealing the Single Business Tax without knowing how we are going to make up the lost revenue.

Now before you start talking about cutting all the fat in government – there isn’t any. Five years ago, there were  some things that could be cut. But they’ve all been cut; people have been laid off, jobs eliminated, programs scratched.

The rainy day fund is dryer than the Sahara Desert. Thanks to downturns in the economy and a long series of tax cuts, the state is having trouble funding its major research universities well enough to keep them in a position to help attract and grow the jobs of the future.

Incidentally, if Michigan once was a high tax state, it isn’t any more. Tom Clay, a longtime non-partisan state budget director, says that compared to other states, we are a little lower than average.

So the question really is, if we repeal the Single Business Tax, then what?  Actually, this is the wrong question. What we need to ask is: What kind of state do we want? What kind of a state can we afford – and what things can we not afford to be without? And then, how should we pay for them?

You have to answer all those questions together. To me, what is happening now – repealing the SBT without any clear indication as to how they are going to replace it -- is the height of irresponsibility.

Many of the lawmakers who are blowing this hole in the state budget now – including Senator Sikkema – won’t be in Lansing when it’s time to clean up the mess. Thank term limits for that.

What I think we need is something like a state constitutional convention, convened specifically to consider the twin issues of what the state needs to do, and what is the best way to get government the money it needs to do what we need.

Naturally, there will be a lot of different ideas. But such a convention could hold public hearings, get attention and hammer out agreements and compromises. That’s what legislatures used to do.

What we badly need is to construct a rational state budget with underpinnings and pillars that make sense. And we need to feel that we have a stake in the process. Otherwise, we can look forward to a future where we feel more and more alienated. And Michigan will feel more and more like a state that is falling apart.

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Comments

[Dan]

There is no fat in the state's budget? Are you kidding me? You don't even know what you're talking about. How about the highest correction spending in the great lakes region...I mean please. The bottom line is that you don't understand that the SBT stops job creation, even worse it taxes it. And if you paid attention there is no one in Lansing that propses not replacing the tax, well maybe Leon Drolet, but that's another story. I could outline millions and millions of dollars in spending that can be cut. Bottom line is that the Single Business Tax is a bad tax, that doesn't make sense. Should some of the revenue be replaced with a business tax that makes more sense? Absolutely it should, but don't tell me, or anyone that the SBT is good for Michigan, for jobs, or for the economy, because it's not. This is why America is sick of liberal like you. And why Democrats like me are sick of the democratic party. Opine on something you know about or have researched, not making blanket statements that make no sense and just continue a dogma that is counter-productive.

[Jack Lessenberry]

If Dan had paid greater attention, he would have noticed that I said nothing in favor of the SBT itself. However, I am not sure how he proposes to save money on corrections. Let the prisoners loose? Starve them:? I don't think so.

[Dan]

Well Jack, if you were to look at are incarceration rates we spend more money per prisoner than any other great lakes state. Is this because we have more criminals, is it because the crimes they commit are more heinous than those committee in Wisconsin? No the answer is that we send non-violent offenders off to jail, keep them there longer, and don’t release them earlier because…that’s right the republicans want to be tough on crime. This could save us millions of dollars. This isn’t the only area where cuts can be made. How about having newly hired teachers (not current or retired ones) from a defined benefit pension, to a 401 (k) like everyone else in Michigan. How about the changes to there health insurance like MESSA and allow individual school districts not the MEA negotiate the best prices. How about we stop all these pork projects that legislators are using to get re-elected (if you’d like examples of this I’d be glad to provide them). The problem with this state is that we would rather see us keep a terrible tax like the SBT, watch are roads crumble, see are schools fail, than invest in the things that can make this state a better place. While our overall business tax burden may be alright (which is debatable but I’ll concede for the point of argument) our compliance costs and complexity is the worst taxes in the nation, the Personal Property Tax and the Single Business Tax. And keeping them is not going to help our economy.