Tagged: taxes

Because of the recent U.S. Census showing significant population loss in Detroit (the city went from 951,270 people in 2000, to 713,777 in 2010), Detroit was at risk for losing tax revenue.

Current state law says a city must have a population of at least 750,000 people in order to tax at certain rates.

State legislators have been working to change that number to help Detroit. A law lowering the threshold to 600,000 passed the State House last week, now it's passed the State Senate.

From the Associated Press:

Michigan lawmakers are approving measures that would allow the city of Detroit to continue its 2.5 percent city income tax on resident individuals and a separate utility users' tax.

Bills allowing continuation of the taxes were approved Tuesday by the Senate on 21-17 and 20-18 votes. The House already has approved the measures so they should soon be sent to Gov. Rick Snyder.

State Senator Bert Johnson (D - Detroit) told MPRN's Laura Weber that 600,000 is a safe and low-enough number, "You know, I think Detroit’s days of really hemorrhaging people are probably behind us," said Johnson. "We'll lose a few more along the way, but not in the significant numbers that we've seen over the past decade."

Governor Rick Snyder came to the Mackinac Policy Conference after landing two big fish from the Michigan Legislature:  a new tax overhaul plan which reduces taxes on businesses and a budget that makes big cuts, including cuts to K-12 education spending.

After these victories, he might have thought he was going to leave the protesters behind in Lansing, but they've followed him to Mackinac Island.

Paul Egan of the Detroit News reports a group of teachers and other public sector workers are protesting Snyder's education cuts and tax policies. Egan quoted Jim Martin, a health and physical education teacher from Sault Ste. Marie, speaking about Governor Snyder:

"He says he's not anti-union or anti-teacher, but his actions say otherwise," Martin said at a news conference about a block away from the Grand Hotel where the policy conference organized by the Detroit Regional Chamber is being held.

The news conference was organized by A Better Michigan Future, a coalition of about 50 union and public interest groups...

"It can't be possible that everyone really believes that corporations need the money more than children," said Tammy Hazley, a special education teacher from Sault Ste. Marie Area Public Schools.

Egan reports the group is calling for a new state income tax, one where higher-income earners would pay more than lower-income earners. The group's director "also called for a reduction in the cost of work contracted out by state government."

A measure that would let Detroit continue to levy taxes on utility bills and income is likely to pass in the state House this week. 

The bill is necessary for Detroit to keep the income and utilities taxes because the law says to keep those taxes a city must have a population of at least 750-thousand. Detroit’s population slumped below that in the past decade. Now lawmakers from Detroit are calling for a change to reduce the population requirement to 600-thousand.

Two-thirds of Michigan businesses are in line for a tax rollback next year. The rest will pay a six percent tax on profits. Pensions in Michigan will be taxed for the first time. An income tax reduction will be delayed to save money to help balance a budget that reduces spending on schools, local governments, and higher education.

These are all details of a sweeping tax overhaul signed into law yesterday by Governor Rick Snyder.

Snyder made cutting and simplifying the taxes paid by businesses his marquee campaign promise, and he got to fulfill that promise just a few days short of five months in office.

“It will create jobs. I’m confident of that.”

The governor says Michigan’s business tax plan will be simpler, and fairer. Only a third of Michigan businesses – those with lots of shareholders and registered as “C” corporations under the tax code – will pay the six percent tax on profits after expenses.

The governor acknowledged some parts of the plan are controversial – especially taxing pensions. Next year, someone living on a $50,000 pension can expect to pay about $1,400 in state income tax.

Snyder says extending the income tax to people born after 1946 with pension income exceeding $40,000 means that share of the burden won’t be shifted to younger people.

“That’s going to help on that issue of keeping our young people right here in Michigan.”

And the governor – a former tech company CEO and venture capitalist -- says the state’s new business tax system should be solid enough to endure for another 50 years.

It's official.

Governor Snyder has just signed "the most sweeping tax change in the state since 1994," according to the Associated Press:

It cuts overall business taxes by about $1 billion in the fiscal year starting Oct. 1 and $1.7 billion the following year and replaces the Michigan Business Tax with a 6 percent income tax on corporations with shareholders. Some of those companies will pay more, but most companies won't pay the tax.

In the Detroit Free Press, AFL-CIO President Mark Gaffney said the tax overhaul won't create jobs.

Gaffney questioned whether a small coffee shop owner who receives a tax cut would hire someone. He said that depends on more business, and more business depends on customers having more disposable income.

"I hate to think Michigan is going to be the next experiment in supply-side economics," he said. "There's a reason they call it trickle-down, it's a trickle."

The Governor's mantra has been that cutting taxes will lead to more jobs in Michigan.

When MPRN's Rick Pluta asked the Governor for empirical evidence how he knows lower taxes will lead to jobs, Snyder said, "It's basic economics in terms of cost structures. There was some polling done by the Small Business Association that actually went out and asked their members about what would you be doing with these resources and they got good feedback to say that a lot people would be looking at creating jobs."

The unemployment rate in Michigan stands at 10.2% right now - that number doesn't count the chronically unemployed - people who have fallen off the unemployment rolls.