Massive corporate tax cut becomes law in Michigan
Gov. Rick Snyder has signed legislation which eliminates the state’s Michigan Business Tax and Surcharge, replacing it with a six percent tax on businesses. The tax package also included provisions to roll back the Earned Income Tax Credit, eliminate the college tax credit and other programs.
The business tax rollback represents a $1.8 billion tax cut for businesses.
The response from progressive groups and labor was swift.
“The signing of the Republican tax bill is a shameful wealth transfer from working people to CEOs,” said Mark Gaffney, president of the Michigan AFL-CIO. “During times of stagnant unemployment levels, these irresponsible measures will increase costs to seniors and push working families further into poverty.”
Gaffney continued, “This is not shared sacrifice; this is an unpopular initiative that was pushed through the Michigan Senate with a final tie-breaking vote from Lieutenant Governor Brian Calley. Governor Snyder said that his number one priority is jobs – yet there is no viable proof that a $1.8 billion business tax cut will produce the jobs Michigan severely needs.”
“Trickle-down economics, supply-side economics, Reagonomics – all have the same thing in common: a failed policy that simply increased income inequality and pushed our economy into a severe recession,” Gaffney continued. “The consequences of this bill will be to ask our seniors, our children and our most cash-strapped citizens to take the whole share of sacrifice so that big businesses can pay less.”
Zach Pohl, spokesperson for the We Are the People coalition which has been sponsoring rallies at the Capitol to protest this year’s budgets, also released a statement.
“The people of Michigan have sent a message at countless rallies, town hall meetings and community events that they expect Lansing politicians to stop the power struggles and start working together to create jobs,” said Pohl. “Instead, state politicians raised taxes on seniors and working families to pay for a huge corporate tax giveaway with no guarantee of job creation. The politicians didn’t listen, and now the people are ready to take this fight back to their home districts to defend working and middle class families.”
Pohl also noted that two Republican Senators had slammed the plan.
The plan has been called “an unnecessary tax increase” by Sen. Dave Robertson (R-Grand Blanc), and Sen. Jack Brandenburg (R-Harrison Twp) has said, “There’s no guarantee that the tax cuts for businesses will generate a lot more jobs.”
The tax plan was a key component of Gov. Rick Snyder’s plan to “reinvent” Michigan, but has faced steep opposition. In fact, the bill passed only after Lt. Gov. Brian Calley cast a tie breaking vote. The original Senate vote was 19-19, even though Republican control 26 of the Senate’s 38 seats.
Snyder put out a press statement defending the cuts, saying they would fuel the economic recovery in Michigan.
“This is a defining moment in Michigan’s turnaround,” Snyder said. “The current tax system is riddled with inequities that are hostile to job growth. Eliminating these longstanding barriers will level the playing field for taxpayers, encourage entrepreneurship and spur more investment in Michigan. Working in conjunction with other reforms such as a balanced state budget and refocused economic development strategies, the overhaul of our tax structure lets job providers nationwide know that Michigan is the place to be. I appreciate the hard work of Lt. Gov. Brian Calley, our legislative partners and the support of stakeholders statewide to make this possible.”