Tagged: taxes

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.

The new budget deal struck this week between Governor Rick Snyder and Republican legislative leaders cuts the amount of money for redeveloping abandoned factories and preserving historic buildings.

The governor says the state won’t need to rely so much on targeted incentives in the future.

The new budget will zero out brownfield and historic preservation tax credits, and replace them with a new fund to offer economic development grants.

$50 million will be set aside for brownfields and historic preservation.

That’s $15 to $20 million dollars less than the state targets now.

But Governor Snyder says the state can do a better job of choosing projects "and hopefully make those dollars go farther than they are today."

Mark Morante, with the Michigan Economic Development Corporation, says the state will target only projects most likely to be completed.

In the past, many tax credits that were awarded went unclaimed. He also says the state won’t need to rely on incentives as much because tax changes will bring down the cost of doing business.

"With this six percent corporate income tax and roughly an 80 percent cut in corporate taxes in general, our job will be a little easier on that side of the table, so we will probably need less incentives," said Morante. 

Those tax reforms have been criticized as a tax shift onto individuals. But the governor and his Republican allies in the Legislature say that will be worth it if it creates new jobs.

DETROIT (AP) - Michigan Gov. Rick Snyder says he plans a trip to New York to discuss the state's bond ratings.

Snyder told reporters following a speech in Detroit Thursday that he and top financial officials in his administration will make the trip after current negotiations over the state budget conclude.

As a new governor, Snyder says it's important to establish a good relationship with agencies that rate Michigan's bonds.

Snyder says he believes the agencies would look more favorably on a state with a "stable, thoughtful tax system," something the Republican former businessman says he has taken steps to achieve.

A top bond rating is a sign of sound fiscal practices and enables an entity to borrow money at the most favorable rate.

Well, Governor Rick Snyder pulled it off. Yesterday, the legislature passed his radical restructuring of the state tax system, agreeing to slash business taxes, eliminate tax credits and for the first time ever, to tax pensions.

The man who was supposed to be a political babe in the woods skillfully guided his agenda home. They will tell you he almost didn’t pull it off. Indeed, Lieutenant Governor Brian Calley had to break a tie vote in the senate to get the bill passed.

But to some extent, this was theater. While some Republicans were genuinely opposed, others were really opposed to being defeated when they run for re-election.

So the outcome was skillfully managed to allow some Senate  Republicans in swing districts to tell their constituents that they voted against Snyder’s plan. But were they really against it? Here’s a clue. When they took a second vote on whether to bypass the waiting period and have the bill take effect immediately, the Republicans unanimously voted to support the governor.

And now for the real test: Will it work? After the vote, the governor praised the legislature for, as he put it, “taking the bold actions necessary to put our state on the path to prosperity, and “paving the way for economic expansion.”

The contrast between Democrats and Republicans on this couldn’t be more stark.

It appears a deal was struck between Republicans and Democrats in the state Senate in order for Governor Rick Snyder’s tax overhaul to be voted on yesterday by Democratic state Senators. Chris Christoff, Lansing Bureau Chief for the Detroit Free Press, reports:

A quiet deal from Senate Republicans to give public schools an extra $150 million next year helped smooth the way Thursday for the 20-19 Senate vote to cut business taxes by $1.7 billion, tax pensions and do away with many tax exemptions.

Senate Minority Leader Gretchen Whitmer, D-East Lansing, confirmed the GOP's offer. It came in exchange for all Democrats going on the record with their votes. If any had not voted, Lt. Gov. Brian Calley couldn't have voted to break a 19-19 tie. A 19-19 tie (the Senate has 38 members) is the only circumstance under which a lieutenant governor can vote…

The deal would lessen a Senate-approved cut to K-12 schools from $225 per pupil less than this year, to $75 per pupil less than this year.

In a piece yesterday on Mlive.com, Peter Luke also mentions a deal:

Preserving the 19-19 vote that allowed Calley to break the tie required all 12 Democrats to vote "no." If one had declined to vote, there's no tie and the measure would have failed.

Democrats agreed to all vote in exchange for a promise that a good chunk of the extra tax revenue anticipated for FY 2012 will mitigate cuts in K-12 education.

Governor Rick Snyder had to compromise along the way-- but approval of his tax reform package hands the governor a significant legislative victory. And, signing the bill will allow the governor to retire the signature issue of his election campaign.

Governor Snyder campaigned heavily on scrapping the complex and unpopular Michigan Business Tax and replacing it with a corporate profits tax. He took office saying fulfilling that promise would be part of an agenda of “relentless positive action.”

“So I believe we’re on a positive path to make that happen. It’s that old ‘relentless positive action.’ I think it’s a little bit contagious and I hope it is.”

His legislative win caps months of negotiations that often placed him at odds with Republicans who opposed extending the state income tax to pensions. He scaled back his original propose, and also relented on ending the earned income tax credit for working poor families. The governor says he’s still happy with the result and predicts it will help spur job creation.

But not enough to convince many Democrats, who intend to make this tax package an issue in legislative elections next year.

A state Senate panel is scheduled to hold a hearing later today on Governor Rick Snyder’s tax reform proposal. The Associated press reports:

The Reforms, Restructuring and Reinventing Committee is scheduled to take testimony Tuesday on legislation that would cut overall business taxes and lead to taxes on certain types of retirement income.

The Republican-led House passed the main bill in the package by a 56-53 vote last month. The legislation will face a tough challenge in the GOP-led Senate because some Republicans already have come out against it.

Some Republicans are opposed to taxing retiree income and to measures that would delay lowering the state's personal income tax rate.

Democrats generally oppose the plan.