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What’s really behind the push to raise the state’s corporate tax rate?

Aug 3, 2015

A group of unions is launching a petition drive to raise the corporate income tax rate in Michigan. But is that really their end game?

Unions strike back

A group of three labor unions wants to strike back against the tax overhaul engineered by Governor Rick Snyder and the Republican legislature in 2011. It was a net tax cut for businesses and higher taxes for people with union pensions.

It's Just Politics with Zoe Clark and Rick Pluta

With that, plus right-to-work and issues surrounding workers-comp, these unions – laborers, carpenters, and operating engineers – say it’s time to push back.

Here’s looking at you, corporations

This latest proposal, led by the new group Citizens for Fair Taxes, would increase the state’s corporate income tax rate from 6 percent to 11 percent, and put the addition revenue toward roads.

At its heart, it’s a little class warfare coupled with resolving the seemingly never-ending roads issue that’s left Governor Snyder and Republican leaders flummoxed for a solution.

What’s really going on?

But, the real question in Lansing right now is: is this a serious effort to tap corporations to pay for roads, or is there something more afoot?

Like, possibly, a warning to business groups that are behind a different proposal - a petition drive to repeal the state’s prevailing wage rules, something labor is completely against.

Is Citizens for Fair Taxes basically saying, ‘we see your ballot proposal that would mess with us, so we’ll raise you a ballot proposal that would mess with you.’

Time out, take a breath

Not everyone, however, in the union movement is on board. Pat Devlin, a leader of Michigan’s construction trades union, thinks this might be getting a little too hot, a little too quickly. “I mean this thing is, it’s getting into all-out war. Once you cross that line, it’s going to be a point of no return. I don’t think we’re there yet, but we’re getting close.”

There’s a fear among some union leaders that this new proposal will create another backlash like the one in December 2012. That’s when Republicans used the defeat of a different union-led ballot campaign as the rationale to make Michigan a right-to-work state. Some worry this petition campaign might just invite similar retribution.

There’s also the thought that maybe just the idea of this proposal –the possibility of an increase in the corporate tax rate – will invite business and Republican leaders to step back on prevailing wage. That, maybe, a deal could be worked out to stop both the petition drive to repeal prevailing wage and the drive to increase the state’s corporate tax rate.

Unintended consequences

Republican leaders who want a roads fix could also use a possible detente on this ballot warfare as a card to play to push GOP rank and file lawmakers to finally fix the roads.

But, if not, and the corporate tax hike makes it on the ballot, look for corporate leaders and their political action committees to open their wallets to fight the ballot with a “just vote-no” campaign. Which could, in turn, also take down other ballot issues, including marijuana legalization and mandatory sick leave.

And, even though there’s no petition drive yet, a lot of Democrats and progressives are awfully interested in redistricting reform to give the Ds a better shot at winning more seats in the Legislature. Something Republicans would fight.

This may all come to down to a question of, ‘hey unions, what do you really want’?