Business leaders wondering whether they have a new ally in the governor’s office got an answer this week: not so much.
The net effect of Governor Gretchen Whitmer’s business tax proposals — aside from her plan to raise the gas tax by 45 cents a gallon – amounts to a tap on the economic brakes just as the hometown auto industry’s sales and profit pace is beginning to slow.
And her plan to repeal the income tax on public-sector pensions, even as private pensions and 401(k)s keep getting whacked, raises a “fairness issue,” as one business leader put it.
The governor’s people say she wants to treat business taxpayers equally. But then she wants to carve out a special class of individual taxpayers who happen to be veterans of Michigan’s public sector. Apparently “fairness” is in the eye of the beholder.
It’s simple: either all retirement income should be subject to the state income tax or none of it should be. If we’re all in this together, as the cliché goes, shouldn’t state policy reflect that reality?
Credit Whitmer with proving an enduring truth of Michigan politics: it’s consistently inconsistent. Here, policy-making swings from one partisan worldview to the other as predictably as crumbling roadways in the freeze-thaw cycle of late-winter Michigan. Consensus depends on who's in power, not any bipartisan agreement on quantifiable reality.
Proof comes in what governors do. And few acts expose priorities more openly than annual budgets and the proposed ways to fund them. Whitmer used her first budget this week to reward political allies and serve notice on small business: you can pay more for the privilege of operating in a state that needs to keep wooing investment and improving its business climate.
Now, smart business people know that success depends on investing in their operations and that they often need to spend money to make it. That argument can apply to government, too. Say, to invest in repairing Michigan’s dismal roads and bridges.
But Whitmer risks losing important business allies with priorities that so openly favor pet constituencies and stick business with the bill.
Michigan's decade-long revival is a product of many forces. Credit a revived auto industry powered by a long-running national economic expansion. And business-friendly tax and regulatory policy at the state level. And comparatively low interest rates and opportunistic investment in a financially restructured Detroit.
Arresting any of those trends for political score-settling - a time-honored tradition - is politics as usual. It’s not smart, it’s counter-productive, and it shows a misunderstanding of how business drives growth.
It’s in the interest of Michigan and Whitmer’s political future to ally with business in ways her predecessor understood. Unemployment plummeted. The auto industry transformed. And business leaders played their part, using corporate dollars to augment limited public budgets.
A vibrant business climate that encourages investment and growth is more valuable to more Michiganians than tax-rate tweaks unlikely to go anywhere in the Republican Legislature. Learning that lesson early is important for Michigan’s new CEO to succeed.