taxes

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Michigan lawmakers are looking at how to get online retailers to collect state sales taxes.

Currently, shoppers are supposed to report any sales taxes they owe on online purchases, and pay them with their income tax.

But most people don’t.

State Representative Eileen Kowall’s bill would put the responsibility on the online retailer.   She’s quick to say this is not a tax increase, just making sure that the taxes that are owed are being paid.

Kowall says the current system puts Michigan’s ‘bricks and mortar’ retailers at an unfair disadvantage.

Official portrait

State House Democrats spent “tax day” pushing a plan to repeal several state tax policies.
 

LANSING, Mich. (AP) - Michigan says the new corporate income tax returns it's processing are much shorter in length than other business tax returns.

The state Department of Treasury says the returns submitted to date average 17 pages. That's 41 fewer pages than the average Michigan Business Tax return.

The Corporate Income Tax approved in 2011 took effect for the 2012 tax year. Some businesses still file an MBT return because they qualify for certain tax credits.

The state says some MBT returns are longer than 1,000 pages.

User: Brother O'Mara / flickr

Michigan could loose $140 million if federal budget cuts happen Friday

"The White House says Michigan faces about $140 million in losses if an automatic federal budget cut takes effect Friday, and U.S. Sen. Carl Levin says he's hopeful the deadline pressure will prompt Congress to raise money by closing some tax loopholes. The cuts include $67.7 million in gross pay to 10,000 civilian Defense Department employees in Michigan and $42.2 million to K-12 and disability education programs in the state," the Associated Press reports.

Bankruptcy planning for Detroit

"It appears that officials are laying the groundwork for a so-called 'managed bankruptcy' in Detroit—though they hope that won’t actually happen. A process for going through chapter nine municipal bankruptcy is laid out in the state’s new emergency manager law that kicks in next month. Governor Snyder acknowledges that bankruptcy might be the only way to reduce Detroit’s long-term debt—estimated at more than $14 billion," Sarah Cwiek reports.

Taxes impact low and moderate earners this year

"Changes to Michigan's tax structure are hitting low and moderate earners hard this year. Lawmakers approved changes in 20-11 that cut 1-point-6 billion dollars in business taxes, but raised taxes on individuals. Low-income families could be the hardest hit, with the elimination of the child tax deduction, and a reduction in the Earned Income Tax Credit," Vincent Duffy reports.

Where do Michigan's tax dollars go?

Feb 18, 2013
John-Morgan / creative commons

Ever wonder where your Michigan tax dollars go?

MLive’s Jonathan Oosting has an article today that breaks it all out.

He notes that:

Michigan is one of eight states that levies a sales tax on fuel purchases, but it does not devote any of that revenue to road maintenance or repairs.

Steve Carmody/Michigan Radio

LANSING, Mich. (AP) - In the height of tax season, many Michigan residents owe more money to Lansing.

Some major income tax changes approved 21 months ago by Gov. Rick Snyder and lawmakers are just now starting to hit taxpayers filing their state returns.

Homeowners and renters used to qualify for a credit if their household income was no more than around $83,000 a year. Now they don't get it unless their total household resources are $50,000 or less.

A state tax deduction for children is gone. So is a special exemption for seniors.

Gov. Snyder / Twitter

Governor Snyder says despite mounting political tension, his second year in office brought about many major accomplishments.

During a year-end roundtable with the press today, the governor touted a number of policies he says will move the state forward.

They include an agreement to build a new international crossing in Detroit, a phase-out of the state’s tax on industrial equipment, and a regional transit authority for southeast Michigan.

Snyder had to be asked before he made any mention of some of 2012’s controversies, including the new “right-to-work” law, and emergency managers.

He says lawmakers in 2013 should not let those issues get in the way of bipartisanship.

"That’s the start of the process to bring people back together, to say ‘we’re looking beyond just people saying they’re fighting, but we should be looking to service our citizens,’" said Snyder. "Because what really matters is customer service to our citizens, not hard feelings over some other particular issue."

The governor also said the “right-to-work” law is already attracting attention from businesses looking to move to Michigan.

Rio Tinto Eagle Mine

Governor Rick Snyder has approved an overhaul of how mining is taxed in Michigan.

Right now, mines pay a mix of property taxes, income taxes and sales taxes.

Soon, mines will instead be taxed on the amount of nickel, copper, and other ores are pulled from the ground.        

Snyder said he expects the simpler tax structure will lure more mining operations to northern Michigan.

Colin Chauret grew up in Bay City during World War II, fascinated by the Battle of Britain and dreaming of becoming a Spitfire pilot. When he graduated, he joined the service.

They taught him to fly, but instead of sending him to battle, they used him to train other pilots. The war ended before he could see combat. But Chauret stayed in, and eventually flew a hundred combat missions in Korea. He later was a staff officer in Vietnam.

He spent more than 30 years in what became the U.S. Air Force, rising to full colonel before he retired. He turns 90 in January, and is still military to the core. Two of his sons and one grandson are Air Force lieutenant colonels. He’s deeply religious, and credits God for saving him from one crash that killed a close friend.

Most afternoons, he walks for exercise in a shopping mall near where they now live in San Antonio, and shakes the hands of every wounded veteran he sees. These days, however, he is more interested in government.

He is worried about the fiscal cliff, the health of his native Michigan and the national debt most of all. But his views are not what you might think. “I am a liberal and damn proud of it,“ he told me, adding, that “after all, Jesus was the greatest liberal of all time.”

Steve Carmody / Michigan Radio

Governor Rick Snyder and Lieutenant Governor Brian Calley want the Legislature to enact a major tax overhaul before its current session ends in two or three weeks.

It would phase out Michigan’s tax on business and industrial equipment.   

It is widely agreed the tax discourages investment and is a particularly large burden on manufacturers.

The phase-out would take 10 years, with smaller businesses benefiting first.

Lieutenant Governor Calley said Michigan’s economy is still rooted in manufacturing.

“Eliminating this disincentive to invest will help improve our climate for job growth. Our whole state will benefit,” said Calley.

The holdup has come from local governments and school districts, which rely on that revenue.

David Lossing is the mayor of the city of Linden, near Flint, and president of the Michigan Municipal League. Lossing said there are still too many questions about this plan, and it could force many communities to cut services.

“We want to make 21st Century communities. We want to make these places where people want to live, want to shop, want to open a business, and so forth. If you throw us over the cliff, we’re not going to attract the businesses that we think we need to have to make us prosperous," said Lossing.

The plan would guarantee money for police, fire and other emergency services, but only if voters approve the plan in a statewide election. Other services could face cuts.

The state House Tax Policy Committee will hold a hearing on the proposal Wenesday.

mich.gov / Michigan Government

Some Michigan legislators are working to give pregnant women a tax break for their fetuses.

The plan is to allow a woman to claim a 12-week-old fetus as a dependent on their state income tax return.

From House Bills 5684 & 5685:

It’s obvious why the Ambassador Bridge-owning Moroun family is backing Proposal 6. That’s the ballot measure that would require of vote of the people to build international crossings. It would be another step toward blocking a competing bridge Canada has offered to fund.

States with supermajority requirements for tax increases. Mich. has a supermajority requirement for raising property taxes. If Proposal 5 passes, Mich. would join the states in gray with the most restrictive taxing policies.
Citizens Research Council of Michigan

State legislators play the game. Michigan voters will set the rules.

The playing field for Michigan lawmakers could change significantly after Nov. 6, if voters approve any one of five constitutional amendments on the ballot.

The "bed sheet ballot" is something California voters are used to, but Michigan voters haven't seen this many proposed constitutional amendments since 1978, when voters faced 9 proposed amendments.

We're posting on all the proposals seeking to amend the Constitution.

Congressman Fred Upton
Republican Conference / Creative Commons

Congressman Fred Upton says he’s in favor of getting rid of federal subsidies for the oil and gas industry.

He made the comments during a debate last Monday night in Kalamazoo. The debate was hosted by The Kalamazoo Gazette/Mlive.com and public radio station WMUK. You can hear the entire debate on their website.

During a discussion about renewable energy, Upton said the country “doesn’t need tax subsidies” for any energy companies.

Upton railed against President Obama’s investment in failed solar panel company Solyndra.

“We don’t need subsidies like this, particularly when the taxpayer losses every dime in their pocket. So I’m for putting all of these on an even footing. Let’s look at the oil and gas subsidies. Let’s taken them away. Let’s let them compete just like everyone else at the same level. We can do that with the tax code to take those special provisions away,” Upton said.

Nobody likes taxes, and for the last 30 years, we’ve been happily brainwashed into thinking that our taxes are too high.

And, as a result, a leading economist told me the other day, “We have some of the worst roads in the country.” But hold on. If a lot of people are fooled into voting yes on Proposal Five, our roads and everything else are certain to get worse. In fact, much worse.

That’s the conclusion of Michigan State University Economics Professor Charles Ballard, perhaps the top expert on our state’s economy. His short, excellent book Michigan’s Economic Future ought to be required reading for anybody who wants to understand how things work.  Believe it or not, there are a few hard facts you need to know about taxes. First of all, we are already paying far less than we once were. Ballard told me, “State and local tax revenues in Michigan are already a much smaller fraction of our economy than they were a few decades ago.”

How much money is that?

User: Brother O'Mara / flickr

Snyder likely to veto handgun bill

"Governor Snyder has indicated he will likely veto a bill that would change the state's gun sales law. The bill would eliminate a state background check requirement for sales made over the Internet or at gun shows. Those account for close to half of all gun sales," Sarah Hulett reports.

House speaker Bolger criticized for his company's tax history

"State House Speaker Jase Bolger is facing harsh criticism about his business record from a liberal advocacy group. Progress Michigan released documents alleging Bolger’s company, Summit Credit Service, failed to pay more than $100,000 in taxes and fees between 1997 and 2000. The papers include liens from the Michigan Treasury Department, the state Unemployment Agency, and the IRS," Jake Neher reports.

Striking Detroit workers suspended and face firing

Thirty-four striking Detroit employees of the water and sewage department who went on strike this week have been suspended and face firing. It's illegal in Michigan for municipal workers to strike. Sarah Cwiek reports that, "City officials plan to largely privatize the water department over five years, and cut up to 80-percent of its staff."

House Speaker Jase Bolger.
Jase Bolger / Facebook.com

State House Speaker Jase Bolger is facing harsh criticism about his business record from a liberal advocacy group.

Progress Michigan released documents alleging Bolger’s company, Summit Credit Service, failed to pay more than $100,000 in taxes and fees between 1997 and 2000.

The papers include liens from the Michigan Treasury Department, the state Unemployment Agency, and the IRS.

Bolger’s spokesperson, Ari Adler, said all taxes and fees have been paid in full.

“All of these issues were addressed more than 10 years ago. And now Speaker Bolger and his partners have a successful small business that is employing people in Michigan,” Adler said.

The Speaker is currently under investigation by a grand jury for allegations of election fraud in a separate matter.

I’m not running for anything, now, or presumably ever. But I have a confession to make. I am not rich, but my household income is more than a hundred thousand dollars a year.

Nevertheless, I get a form of welfare from the government. And my guess is that you do too. If not, other members of your family do. My welfare is called the home mortgage tax deduction.

The government exempts me from paying thousands of dollars in taxes that I would have to pay if I lived in a rented apartment.

A new state tax to help pay for Medicaid is coming up $130 million short of projections.

The one-percent tax on health insurance claims was supposed to bring in $300 million this fiscal year. Now, budget officials say it’ll only generate about half that. Budget department spokesman Kurt Weiss said the state should be able to scrape together enough money to make up for the missing tax revenue. It is federal matching funds he is worried about.

“If you look at the way the match works, there’s the potential of losing up to $260 million in matching federal funds with this if we’re $130 million short. So, certainly that is part of the concern,” Weiss said.

Weiss said bad projections could be to blame for the gap, or health care providers simply might not be paying their share. He said his department is working with other state agencies to pin down the problem.

“It is a new tax, and it is something new to those that are paying it. So we’re really trying to reach out, do that education, and trying to make sure we’re getting the money from everybody we should be getting the money from,” he said.

Weiss said officials are looking for ways to try and make up the state’s shortfall. If shortfalls continue, he says lawmakers may have to make changes to the tax.

Five million Michigan voters will go to the polls two months from today. When they are handed their ballots and walk into the voting booth, they will face six ticking time bombs.

I’m talking about the ballot proposals. Yesterday, the State Supreme Court ended a legal battle by ordering three more proposed constitutional amendments on to the ballot. They’ve already put two others there, plus a referendum on the emergency manager law.

Lindsey Smith / Michigan Radio

Republican Presidential nominee Mitt Romney is refocusing his tax plan to strengthen the middle class. Romney was in Colorado Thursday to outline his plan, which included points that have been previously released.

In Michigan and other states the campaign lined up several small business owners to share their support for Romney.

Tyce Holst owns Taylor Rental and Party Plus, a rental store in Holland that employs 10 full time workers. Holst says the recession forced him to lay off two employees.

Steve Carmody/Michigan Radio

There may be some good economic news in a place that's usually just about bad news: county tax foreclosure auctions.

Flickr/Sarah Sosiak

Michigan's Treasury Department says the state will lose about $242 million in tax revenue from Amazon and other online retailers.

States have trouble collecting sales taxes from sellers that don't have a physical presence within their borders. Amazon owns Grand-Haven-based audio book publisher Brilliance Audio, but Treasury spokesman Terry Stanton says Michigan considers it a separate entity.

Last week, I talked about the Michigan House of Representatives voting to slash the state income tax over the next six years. I thought this didn’t make a lot of sense, given that the state is having a hard time paying for essential programs now.

Later that day, I talked more about this with the man I think has the best overall knowledge of our state’s economy: Michigan State University professor Charles Ballard, author of the best little book there is on the subject: "Michigan’s Economic Future."

Lindsey Smith / Michigan Radio

Hundreds of people showed up for a public hearing in Saugatuck Wednesday night. Most spoke against the proposed plan to merge the cities of Saugatuck and Douglas.

Travis Randolph is with the group that’s behind the idea. He hopes a state commission will decide the proposal is reasonable enough to put before voters.

"The ultimate poll is an election and that’s all we’re trying to get to. So that everybody can have a say. And in the process of getting to the election, you have to go through dealing with those people who have emotional connection to the present, not to the future,” Randolph said.

Capitol Building, Lansing, MI
Matthileo / flickr http://j.mp/1SPGCl0

The Legislature has sent election-year tax reductions to Governor Rick Snyder for his approval.

The measures would accelerate a reduction in the state income tax rate, and increase the personal exemption. That’s after a tax rate rollback was delayed last year.
    
The House also approved a measure to continue rolling back income tax rates through 2018.
    
Democratic state Representative Vicki Barnett was one of just a handful of “no”’ votes.

She says the six-year rollback is poorly planned, and could force more cuts down the road to schools and public safety.

“The numbers don’t work. I’m a financial planner in my private life. I’ve looked at the numbers. The numbers don’t work. I would love to be able to return excess money to the taxpayer, but after we fund critical services to the level they should be funded at," said Barnett.

The Legislature begins its summer break today. The state Senate could take up the six-year rollback later this year.

Lindsey Smith / Michigan Radio

Despite some public pressure, Grand Rapids City Commissioners declined to support a proposal that would restrict abortion coverage for city workers. A group turned in more than a thousand signatures in favor of the proposal last month.

Health insurance for Grand Rapids city workers does not cover any elective surgeries. So abortions are only covered when deemed “medically necessary”. The proposal would’ve defined that to mean only in cases of rape, incest and to protect the health of the mother.

Brother O'Mara / Flickr

Mackinac Policy Conference kicks off today

The annual Mackinac Policy Conference gets underway today on Mackinac Island. The conference is sponsored by the Detroit Regional Chamber and has been taking place since 1981. It's a place where policy makers, politicians, and business and thought leaders get together to discuss ideas and policies that could shape Michigan's future.

Conference organizers hope to "spur a comprehensive dialogue on innovation, collaboration and the 21st century global market" at this year's conference.

If you feel compelled to tweet about the event this week, the hashtag for the conference is #mpc12.

Michigan Governor Snyder will deliver welcoming comments today at 3:30 p.m.

Michigan Radio's Zoe Clark and MPRN's Rick Pluta will bring us updates from the conference. You can also watch online coverage of the event sponsored by Detroit Public Television.

Update on wildfires in the Upper Peninsula

The AP reports that the 3,400-acre Pine Creek North wildfire in Schoolcraft County is mostly contained:

Officials say some crews are leaving the area as mop-up operations continue. Firefighters on Tuesday planned to patrol the perimeter of the fire looking for hot spots.

The wildfire was ignited by lightning and first reported on May 21.

However, the Duck Lake Fire continues to burn. More from CNN wire services:

The Duck Lake Fire has burned more than 22,000 acres and is still going despite recent rains, the Michigan Department of Natural Resources reported on its website.The state agency estimated Monday the blaze is about 51% contained, thanks to progress made by firefighters in maintaining a firm perimeter.

Moving up income tax cut called a "gimmick"

The Michigan House of Representatives will begin taking up plans today to move a planned income tax cut up by a few months.

The tax rate will drop from 4.35 percent to 4.25 percent next January. The Associated Press reports Michigan House Republicans want to start the tax cut in October 2012.

House Republican Speaker Jase Bolger wants to return $90 million from a budget surplus to taxpayers. The tax rate would drop from 4.35 percent to 4.25 percent.

The Michigan League for Human Services says the move is an election-year gimmick. It says the money would be better spent offering preschool or dental care to low-income children.

Democrats say tax changes passed last year by GOP lawmakers will require that individuals pay $1.4 billion more in taxes next year. They say the $90 million cut is insufficient.

Matthileo / Flickr

Taxes, as we all know too well, are a powerful political issue. And the issue has come up yet again at the state Capitol. A cut in the state income tax has become part of the negotiations as Gov. Rick Snyder and the Legislature's top Republican leaders wrap up their budget negotiations. Rick Pluta, Lansing Bureau Chief for the Michigan Public Radio Network, and I sit down to talk politics every Friday and today, in It's Just Politics, it is all the politics of taxes.

Rick Pluta: The governor and the Legislature have set this deadline of June 1 for wrapping up the next state budget.

Zoe Clark: And that's important, because - even though the state's fiscal year begins October 1 - schools, community colleges, cities, townships, and counties all have budget years that begin July 1. They all have budgets that are tied into state spending.

RP: Right. Now, in the final days of discussions, Republicans have put an income tax cut on the table. State House Republicans will roll out the legislation next week.

ZC: So, that begs the question: why are they doing it now?

RP: Well, for a year and a half, Democrats in Lansing have hammered Republicans because all the tax and budget reforms have focused on reducing costs for businesses: eliminating the Michigan Business Tax on 95,000 businesses and the proposal to eliminate the tax on industrial equipment.

ZC: At the same time, a dozen tax credits and exemptions claimed by homeowners, parents, seniors on pensions, and  poor families earning incomes were ended.

RP: And Democrats have been pounding Republicans with that incessantly and with an eye toward the November elections - when, we should note, all 110 seats in the state House of Representatives are up for election.

ZC: So now, courtesy of Republicans, a proposal for income tax relief.

RP: The main bills in the tax rollback package will be sponsored by state Representatives Holly Hughes and Ed McBroom, Republicans representing districts that are considered marginally - 51, 52 percent - Democratic.

ZC: And Democrats most certainly want those seats back.

RP: Exactly, and this shows Republicans intend to put a fight in these seats by giving their incumbents these bills. One accelerates a reduction in the income tax rate; the other increases the personal exemption. But the bottom line is Republicans want the message to be: Republicans equal tax cuts. Democrats, however, have already revealed their counterattack.

ZC: And the counterattack is really what their message has been all along. Since last year, GOP hegemony in Lansing has meant tax cuts to businesses while seniors, homeowners, and working poor families all lost tax breaks that they've counted on, as well as reductions for schools, universities, and local governments.

RP:  Right, so Democrats say this so-called "tax relief:" 50 cents a week, nine dollars a person per year  is pretty meager compared to the costs that everyone has had to pick up in the name of improving the business climate.

Michigan's budget will have about $300 million more this year than state economists predicted in January.

That money is the result of a combination of higher-than-expected tax payments and fewer people receiving Medicaid and other state services.

That came from today's revenue estimating conference in Lansing.

State budget director John Nixon says he thinks much of the extra money may go into the state's rainy day fund. Or it may be set aside in case the state loses legal fights over collecting income taxes on public pensions or having state workers pay more of their pension costs.

“What we’ll do is with the one-time money, we’ll look for one-time expenditures," said Nixon. Budget Stabilization Fund is obviously a piece, a good place to put one-time money, as well some of the other spending pressures we have in the budget.”

Officials also estimate the state will have about $100 million more to spend in the budget year that starts Oct. 1.

Nixon says he doesn't think that will mean radical shifts in the budget bills lawmakers hope to finish by month's end.

The budget news accompanies forecasts that Michigan’s economy will continue to grow at a slow pace – with many of the new jobs coming from higher-paying fields. Michigan’s unemployment rate dropped again in April, hitting 8.3 percent.

When people who have quit looking for work are counted, as well as ­part-time workers who’d like to be full-time, Michigan’s rate of unemployment and under-employment is 17.8  percent.

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