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Political roundup: Plan to eliminate the income tax would create a $9 billion hole

Jan 13, 2017

The new Michigan legislature was in session this week, and there has been no shortage of topics to discuss.

To help sort through it all in Stateside's weekly political roundup is Ken Sikkema, senior policy fellow at Public Sector Consultants and a former Republican legislative leader; and Vicki Barnett, a former Democratic legislator.

The easy part is talking about tax cuts. The hard part is talking about the spending cuts that have to go along with it

Sen. Jack Brandenburg, R-Harrison Twp., wants to eliminate the personal income tax in Michigan. His plan to phase out the tax  is being talked about but it would create a major hole in the state budget. How would the state cover the nearly $9 billion lost revenue?

"The easy part is talking about tax cuts," said Sikkema. "The hard part is talking about the spending cuts that have to go along with it."

If you shifted the burden to the sales tax, according to Barnett, you would have to double it, which would have to be approved by voters and would disproportionately affect low-income families.

Barnett also points out that "we still haven't made up for" a loss of $1.8 billion in business taxes that were eliminated in 2011-12. As it stands, the Democrats don't have enough votes to stop the bill, so it will be high drama in Lansing as lawmakers wrestle with the idea of eliminating the income tax.

Listen to the full interview above to hear about new House Speaker Tom Leonard's call for civility in Lansing and why that will be tested in 2017, and the challenges term limits creates for lawmakers to solve long-term problems.

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