What would a reform of the Personal Property Tax really mean?

Apr 18, 2012

If you had any doubts whether Michigan is still an important player on the national stage, consider this. Yesterday, embattled Wisconsin Governor Scott Walker, who is trying to survive a recall, appeared at a fundraiser in the Detroit suburb of Troy.

Today, President Obama will visit fundraisers of his own in West Bloomfield. These men are about as different politically as possible. Walker is seen by the nation's unions as Public Enemy Number One. Those unions will be firmly behind the President's re-election. Obama and Walker differ on virtually every domestic issue.

But they do have something in common. Neither man was scheduled to visit the desolation that is Detroit.

That city's more conservative paper, The Detroit News, startled me today by suggesting that the President's limousine take a detour through the city, perhaps, "past the heaps of rubble that were once businesses on Harper near City Airport, and into the blocks surrounding Denby High School off East Outer Drive, where there are more abandoned homes than occupied ones."

The newspaper suggested that Detroit is every bit as bad off as New Orleans was in the wake of the devastation caused by Hurricane Katrina. But there have been no massive federal programs to rebuild Detroit. This nation has spent billions of dollars on the war in Iraq over the last decade, a war that seems to have won us nothing. Can you imagine the positive effect a small fraction of that money would have had on Detroit? Or Flint, or Pontiac, or any number of the rest of Michigan's crumbling cities large and small?

Municipalities all over Michigan are struggling, and the governor and the legislature are now attempting something that will make things worse. They are launching a drive to "reform" the so-called Personal Property Tax. That sounds like it might have something to do with taxes levied on people's homes and cars and stuff. But that's not what it is about. The "personal property tax" has to do with businesses, with industrial and commercial property. Last year, the governor got a program passed to give businesses a huge income tax break, at the expense of the schools and people's pensions. Now, he wants to cut their taxes further, this time at the expense of local government.

The eight-bill package they introduced to do this is complex and confusing. But it would apparently replace only about four-fifths of the revenue local governments lose. That might have been something our cities and townships could have endured 20 years ago.

But they have been so devastated by the recession, by revenue sharing and other cuts that their finances are at the breaking point. If enacted, this will have disastrous consequences.

The governor wants to attract new business to Michigan - and nobody can deny we need it. But there is a reason businesses aren't expanding in the slums of Guatemala.
 Quality of life issues matter too, as do infrastructure and public services. Governor Snyder ought to take that ride through Detroit the newspaper recommended for the President. Does he think this will help make hot business prospects want to relocate to Michigan?

There's little sign so far that corporate America is rushing to take advantage of the governor's tax cuts.

I wonder if he has any real clue why.