taxes

Lindsey Smith / Michigan Radio

U.S. Senator Debbie Stabenow will introduce a bill next week to prevent companies from getting tax write-offs for moving overseas.

Currently businesses can write off moving expenses on their taxes if they’re moving within or out of the country.  But no such break exists for businesses moving into the U.S.

“That makes absolutely no sense,” Stabenow said at a press conference Monday at Grand Valley State University.

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Every week, Rick Pluta, Lansing Bureau Chief for the Michigan Public Radio Network, and I take a look at state politics.This week: it's all about the politics of taxes. It was Tax Day this week and that brought out plenty of politicians ready to talk about taxes... but, they weren't the usual suspects.

Dems: It's About Taxes

"We had Democrats coming out and talking about taxes which is kind of an inversion of the way that the political world usually works. On Tax Day, you usually get Republicans coming out talking about how taxes are too high... But [this week] you saw Lansing Democrats coming out and reminding people that 2012 was when seniors who have pension income were taxed on that income for the first time and that the dozen or so tax breaks that people used to be able to apply to their state income taxes are no longer," Pluta explains.

GOP: It's About the Economy

Republicans, instead, focused on an economic message with Governor Snyder tweeting about the state's declining unemployment rate. "The Republican message, right now, is framed a lot more around the economy, not taxes... They're really not even trying to get in front of the tax message. What they're trying to get in front of is the message that 'whatever it is that we're doing, it's working.'"

All Politics is Local... Really?

It's important to note that it's not just state Democrats beating the tax drum. "In this age where most elections are really nationalized, especially in presidential election years, what Democrats are saying and doing in Lansing fits in pretty snuggly alongside what we're hearing from Democrats in Washington  and what President Obama is saying about Republicans, and tax policy, and who should be paying more in taxes," Pluta explains. So, although former U.S. House Speaker Tip O'Neill made the "all politics is local" line famous, it certainly doesn't hurt state Democrats to be in step with their party's national talking-points.

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This week certainly had it's share of political news: Governor Snyder made a surprise trip to Afghanistan, Lt. Gov. Brian Calley signed the autism mandate into law and three (out of nine) members were appointed to Detroit's Financial Advisory Board. Pluta and I take a look at these stories and more in an extended edition of It's Just Politics. You can hear the show below:

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The first hearing will be held tomorrow on a Republican plan to phase out taxes on most industrial equipment in Michigan.

Local governments collect about $400 million in revenue a year from the industrial property tax.

Lieutenant Governor Brian Calley helped design the plan to get rid of the tax over the next several years. He says Michigan is unique in how it taxes industrial property -- and he says it’s driving investments to other states and countries.

“So at the end of the day, it’s about jobs and removing the penalty for investing in Michigan,” Calley said.

But local leaders say the way the phase-out is drafted now, it would force disinvestment in schools, and city services. That’s because it does not replace all the revenue lost to local governments.

Some state lawmakers like Senate Democratic leader Gretchen Whitmer agree.

“At best, they only intend to replace 81 percent of the dollars,”Whitmer said. “So does that mean that they are going to cut our fire services 19 percent? They’re also going to cut our police service 19 percent? They’re going to cut our schools an additional 19 percent? How is that made up?”

The communities that would be most affected are industrial cities with the most factories. That includes Michigan's third-largest city, Warren.

Warren mayor Jim Fouts says the city stands to lose $12 million a year in revenue if the tax is repealed.

“It would be absolute disaster," said Fouts, who said he'd be forced to cut public safety and other vital services. 

"It’s a good example of short-term thinking without looking at the long-term consequences, which are draconian consequences.”

Fouts says Lansing has recently shifted more costs and mandates to local governments, while also cutting off their sources of revenue. He sent a letter expressing his concerns to Governor Snyder.

Joe Ross / Creative Commons

Former Michigan Governor John Engler says politicians in Washington need to make important decisions now, despite the general election coming in November.

Engler is now President of Business Roundtable, a national association of CEOs.

He says politicians have a lot of tough decisions to make to keep the U.S. competitive globally. That includes decisions on energy and education; but most importantly, he says, decisions about the tax code and the federal deficit. Engler says those decisions need to made as quickly as possible.

Allieosmar / Flickr

Democrats in Lansing plan to use this week’s tax-filing deadline to re-open the debate about last year’s tax overhaul at the state Capitol.

Democrats think the tax issue will help them in elections this year. Seniors born after 1946 have their pensions taxed for the first time. Deductions and tax breaks for many charitable donations will be gone when state taxpayers file next year. At the same time, taxes were lowered for many businesses.

Democrats intend to remind voters of that as they try to win an additional nine seats in November to take control of the state House. They say more than a dozen swing districts will be the target of fierce campaigning on the issue of taxes.

Republicans says there are elements of the tax overhaul that were unpopular, but necessary to streamline and simplify tax filing and to make Michigan a more business-friendly state.

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LANSING, Mich. (AP) - Lower-than-expected tax collections could threaten parts of Gov. Rick Snyder's next state government budget plan.

Republicans who control the Michigan Senate have preliminary plans to spend roughly $150 million less overall than Snyder has proposed for the fiscal year starting in October.

The targets include about $25 million less than Snyder proposed for information technology system upgrades and $45 million less on the state prison system.

The Senate targets do not reduce Snyder's funding proposals for education. Proposed spending would be relatively flat for K-12 schools, while universities and community colleges could get average increases of about 3 percent.

The Snyder administration says it's too early to change its budget plan, noting more information will be available when state economists gather in May for an official revenue estimating conference.

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Voters may soon decide whether Michigan should scrap the 19-cents-per-gallon tax on gas at the pump in favor of a sales tax increase of 1 percent.

The change would help generate more money for transportation funding.

A proposal to put the question to voters is gaining momentum with some legislative leaders.

That change would require a constitutional amendment and put the question to voters on the ballot.

Republican state Senator Howard Walker sponsored the measure. He said if taxpayers are asked to pay more to fix the state’s roads, they should have a voice.

MLHS

A new report by the Michigan League for Human Services takes a look at Michigan's shifting tax policy and it's impact on low-income families.

The report shows what we already know, that businesses in Michigan will receive a tax cut in the state while individuals will pay more.

Low income families, the report's author Joanne Bump concludes, will be hit the hardest.

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A new report says three Michigan companies spent more on lobbying than they did in corporate income taxes between 2008 and 2010.

Those companies include Michigan’s two biggest utilities, DTE and Consumers Energy. It also includes Ann Arbor-based freight hauler Con-way.

The state is bringing in more money than expected. That’s according to a report by the non-partisan Senate Fiscal Agency.

The agency says Michigan ended the fiscal year that ended September 30th with a $1.3 billion surplus. An improving economy and lower income tax refunds are largely credited for the surplus. But much of the windfall has already been dedicated to programs in the current fiscal year.         

David Zin is an economist with the Senate Fiscal Agency. He says the auto industry still has a major impact on the state’s economy.

“People cut back so much on vehicle purchases in the 2008-9 recession, that while sales are low by historical standards, they’re up quite significantly from just a year or two ago,” Zin said.

Zin says the state collected more tax revenue in 20-11 than projected last year. He says the economy is not expected to grow quickly over the next couple years.

Lindsey Smith / Michigan Radio.

Sales of real Christmas trees are down more than 20 percent for the past two decades. This season Christmas tree growers wanted to collectively start an advertising campaign to try to reverse that trend. But of all things, politics, got in the way. 

Artificial Christmas trees gaining favor

Real trees still outsell fake trees by about three to one. But artificial tree sales have been increasing for several years. Fake trees now have a slightly higher share of the Christmas tree market than real ones. Michigan is the third largest grower of real Christmas trees in the U.S., harvesting around 3 million a year.

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Nonprofits across Michigan are doing their annual end-of-year holiday push for financial donations. This will be the last time donors will be able to take advantage of a charitable tax credit.

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A top Michigan Republican would like the makers of Jack Daniel's whiskey to consider moving north if the company decides to leave Tennessee.

House Speaker Jase Bolger has invited distillery managers to visit Michigan. He says the state's business climate is improving, and he noted the state's large supply of fresh water.

A spokesman for Jack Daniel's parent company said Friday there are no plans to visit Michigan or other places that have made similar offers since a dispute about taxes sprouted in Tennessee.

Some Moore County citizens have proposed a "barrel tax" for the Lynchburg, Tenn., distillery that could raise up to $5 million a year. They're asking Tennessee lawmakers to authorize a local referendum.  

The distillery is waiting to see what happens with the tax issue.

John Morgan / Flickr

(*Editor's note - Michigan Radio, as a licensee of the University of Michigan, benefits from this tax credit)

The Michigan charitable giving tax credit expires at the end of the year, and charities are expecting the amount people donate to charities to drop as a result.

The charitable giving credit was ended as part of Governor Snyder's effort to pay for a business tax cut of more than $1.5 billion.

The credit allows Michigan taxpayers to essentially double their contribution when they give to community foundations, homeless shelters, food banks and public institutions (such as Michigan universities, museums, public libraries, and public broadcasting stations).

For a single filer, half their contribution can come off their Michigan tax bill up to a $200 contribution. Joint filers can take half of a $400 contribution.

Brian Conner of the Detroit News wrote a piece on the expected effects of the credit's expiration.

Conner writes that charities in Michigan don't quite know how much of their donations are tied to the credit, but the expect to take some kind of a hit.

The Lansing city council has moved a step closer to approving a tax deal that could lead to an expansion of  Capital Region International Airport.   A final vote is scheduled for next week.   

Businesses at the airport oppose the tax deal.     George Carr owns a hanger at the airport.  He says the tax deal is a 'killer'.

“This…pits the existing tenants and businesses against future tenants and businesses.   It does it by raising taxes…on existing businesses…so they can abate taxes on future businesses that may or may not locate there," says Carr.   

A city economic development official says  the proposal will help improve business at Lansing’s airport.  Bob Trezise with the Lansing Economic Development Corporation says the tax increase is a question of ‘fairness’.  

"We just merely are saying  ‘We wish you to pay a small amount to participate in supporting the airport, like all the businesses and residents of Ingham County do.  And you’re at the airport'," says Trezise.  

The tax deal must be in place by the end of the month so the airport can apply for a state development grant.

It turns out Michigan's state government might have brought in more money from taxes and fees than previously expected in the fiscal year that ended September 30th. That likely will set up a battle this fall over what to do with
the cash, which could total $285 million or more.

Democrats, outnumbered in the Michigan Legislature, say any extra money should be committed first to public schools and education programs that are dealing with budget cuts in the fiscal year that started this month.

Republicans, including those in Governor Rick Snyder's administration, are hesitant to commit to any spending before they have a clearer picture of state revenues.

Snyder's budget office is expected to close the books on the recently completed 2010-11 fiscal year in December.

(photo by Steve Carmody/Michigan Radio)

Michigan Senator Debbie Stabenow says she doesn’t know if the president’s jobs bill will clear its first legislative hurdle later today.    That’s when the U.S. Senate is scheduled to take a procedural vote on the $447 billion ‘American Jobs Act’.   

Stabenow, a Democrat, says she’d like to see the legislation move forward.  

The Michigan legislature and the governor are working to make Michigan a more business-friendly state by changing the tax structure.  But, while businesses are benefiting from already passed tax reductions --and anticipate more--  the change is costing communities. 

I went to one city to see how it was handling those changes.

When I visited, it was a beautiful day in downtown Monroe.  The city is situated on the River Raisin in the southeast corner of the state, right on Lake Erie.  It’s just 19 miles north of Toledo, Ohio.

The state is holding a series of workshops to get the public’s feedback about historic preservation. A meeting is planned in Traverse City on September 21 and in Detroit on October 12. Another meeting will take place in Lansing in January.

People have already attended workshops in Kalamazoo and Midland. Their biggest concern so far is the lack of funding for preservation programs.

Laura Ashlee is with The State Historic Preservation Office.

“As part of the governor’s restructuring of taxes in Michigan for businesses he eliminated the tax credits for historic preservation. There will be a new program, we believe, and we’re going to work with the governor to implement that program.”

Ashlee says historic preservation also makes economic sense. She says people are employed when working on restorations. She also says historic buildings attract people and businesses to that area. 

The State Historic Preservation Office is in the process of writing its plan for the next five years. And the public’s feedback will help shape its plan.

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The Michigan Supreme Court has agreed to let unions and business groups weigh in before the justices rule on whether the state’s new tax on pension income is legal.

The court will hear arguments in the case next week.

Governor Rick Snyder asked the court to cut short any legal challenges with a preemptive ruling.

The governor wants an opinion from the court before the end of the month.

His budget relies on $343 million dollars from taxing pensions, and he wants to avoid months or years of legal wrangling on the question.

The governor asked the court to decide whether the pension tax breaks a promise by the state to retirees and public employees; and whether income limits in the law amount to a graduated income tax – which is prohibited by the state constitution.

The Supreme Court has agreed to accept briefs from retiree associations and unions that oppose the pension tax, as well as business groups that say the tax is fair.

The Michigan Education Association, the UAW, and the AARP are among the groups that filed briefs opposing the tax. They say the pension tax breaks a promise to retirees and public employees, and it violates the state constitution.

Business groups, including the Michigan Bankers Association, and the Small Business Association of Michigan, are backing Governor Rick Snyder. They say the pension tax is fair because it treats all income equally in the tax code.

If the pension tax is upheld, pension income will be subject to the state income tax starting January 1, 2012.

There are taxes, and then there are taxes. Some are straightforward. If I spend ten dollars at the hardware store this afternoon, I know I’ll pay sixty cents in sales taxes.

But other taxes are hidden, and may be higher than we suspect. The Mackinac Center for Public Policy is an independent, non-partisan think tank with a strong fiscally libertarian bias.

Last week, it released a statistical analysis of liquor prices. The center found they are higher in states like Michigan where the state government acts as the statewide wholesale distributor.

How much higher? A little over six percent. They took as their example a fifth of a particular common brand of Scotch. They found that it costs, on average, a dollar fifty-nine more a bottle in the seventeen states like Michigan where government is the wholesaler. The Mackinac Center said this amounted to, “a substantial hidden tax on a commodity already subject to large state and federal taxes.” The implication is that this is bad.

However, I’m not so sure. I suppose it would bother me more if it were a tax on baby formula, or if the tax left liquor costing twenty percent more than in Illinois, for example. But nobody forces anybody to buy a bottle of Scotch.

Dave Garvin / Flickr

How to get by with less is an issue all levels of government are facing.

The emergency manager in Pontiac, Michael Stampfler, is proposing a combination of tax hikes and service cuts to cure the city's budgetary ills as reported in the Oakland Press:

Stampfler took to the microphone this morning for an informational meeting about the updated financial plan that could mean property taxes being raised between 6 and 8 mills.

He requested the public and elected officials submit ideas in writing if they have alternatives to what is proposed.

Stampfler released an update of his financial plan, adding $15.05 million to the budget with a combination of cuts and possible tax hikes.

An 8 mill property tax increase would mean that a property owner whose house is assessed at $50,000 would pay $400 more a year in taxes.

This past spring, the assessed value of homes in Pontiac dropped by an average of 21.4 percent, resulting in $2.6 million in lost annual revenues for the city.

Fozzman / Flickr

It’s a tough time for arts funding around the nation. Kansas, as an example, just cut all its state support. It’s a different story in the Cleveland area, though. That region has found a unique way to fund the arts, and it’s paying off big.

It’s made residents like Samantha Kane arts patrons of sorts. She says she smokes about two or three packs of cigarettes a week. We find her waiting at a bus stop with a stroller in one hand and a cigarette in the other. Since 2006, each cigarette she smokes contributes a penny and a half to Cuyahoga County’s arts organizations.

“I love that it goes to something instead of road work, or you know, padding congressmen’s pockets,” Kane says.

This county cigarette tax really adds up. The group that administers the money is doling out $15 million this year alone. That’s enough to catapult the Cleveland area to among the top public funders for the arts in the nation—many times more than what most states contribute.

“I tell people: you don’t have to smoke ‘em, just buy them,” says Cindy Einhouse, CEO of the Beck Center for the Arts in Lakewood.

It puts on shows, teaches dance and music, and provides summer camps for kids.

Einhouse says the recession hit her organization hard. The Beck Center almost closed its doors in 2009. A wave of private donations helped, but she’s grateful for this county tax.

Rick Snyder said the Michigan Business Tax was bad for business. 

 “I propose replacing it with a flat six-percent corporate income tax.  Let’s take a job-killer environment; let’s start creating jobs.”

He said it on the campaign trail.  He made the point to business leaders.

(Flickr ebatty)

Michigan Senator Carl Levin says one way to reduce the nation’s federal budget deficit is to close loopholes in overseas tax havens.  Levin says offshore tax loopholes cost the federal treasury 100 billion dollars every year.   He says the complexity of the tax havens make them difficult to trace. 

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The old film incentives were scrapped in the tax overhaul approved by the Michigan legislature and the Governor.

They said the old film incentives, which gave production companies a 42% credit on total expenses in Michigan, was too costly ($115 million was spent last year, according to the Mackinac Center for Public Policy).

In it's place, a $25 million film incentive program for Michigan's next fiscal year (which starts October 1).

Now, Senate Majority Leader Randy Richardville says he wants to improve the film incentives.

MPRN's Rick Plua filed this report:

Richardville says his new proposal would focus financial support in activities that reward spending on Michigan products, services, and workers.

He says investors have put money into expensive production facilities, and workers have learned new skills in the belief that incentives would attract more film business to the state.

 “I think the strength of that workforce, the strength of the investments we have in Michigan will cause us to win contracts in competitive situations versus other states. Once we’re done with that, then let’s analyze it to see what we can afford versus what the industry needs to sustain itself here in Michigan.”

Governor Rick Snyder’s office says he would like to see how Michigan’s new incentive program is working before making changes.

This just in from Michigan Public Radio Network's Laura Weber:

The state Senate has approved a tax on health insurance claims. The measure is necessary to ensure Michigan continues to receive about $800 million from the federal government for Medicaid. The federal government is expected to rule later this year on whether the state's system for funding Medicaid is legal.

The Senate had put the issue up for a test-vote yesterday but it didn't pass. As Rick Pluta noted in a story before the second vote took place:

Governor Rick Snyder has been pressuring the Legislature to adopt a one percent tax on all health insurance claims. That would put Michigan in compliance with federal rules. Otherwise, Michigan could lose 10 percent of its funding for the entire Medicaid program. The claims tax would generate $400 million, and qualify the state for twice that much in federal funds.

sentate.michigan.gov/gop

Add State Senator Mark Jansen to the growing list of republican lawmakers in Michigan facing a recall effort.

Kent County election officials approved the recall language this morning. Now volunteers can begin collecting signatures. They’d need 26,611 voter signatures to get the recall on the ballot.

Jansen says he’s taking the challenge seriously and is prepared to run a reelection campaign if he has to.

Bob Jagendorf / Flickr

Because of the recent U.S. Census showing significant population loss in Detroit (the city went from 951,270 people in 2000, to 713,777 in 2010), Detroit was at risk for losing tax revenue.

Current state law says a city must have a population of at least 750,000 people in order to tax at certain rates.

State legislators have been working to change that number to help Detroit. A law lowering the threshold to 600,000 passed the State House last week, now it's passed the State Senate.

From the Associated Press:

Michigan lawmakers are approving measures that would allow the city of Detroit to continue its 2.5 percent city income tax on resident individuals and a separate utility users' tax.

Bills allowing continuation of the taxes were approved Tuesday by the Senate on 21-17 and 20-18 votes. The House already has approved the measures so they should soon be sent to Gov. Rick Snyder.

State Senator Bert Johnson (D - Detroit) told MPRN's Laura Weber that 600,000 is a safe and low-enough number, "You know, I think Detroit’s days of really hemorrhaging people are probably behind us," said Johnson. "We'll lose a few more along the way, but not in the significant numbers that we've seen over the past decade."

Charles Dawley / Flickr

Governor Rick Snyder came to the Mackinac Policy Conference after landing two big fish from the Michigan Legislature:  a new tax overhaul plan which reduces taxes on businesses and a budget that makes big cuts, including cuts to K-12 education spending.

After these victories, he might have thought he was going to leave the protesters behind in Lansing, but they've followed him to Mackinac Island.

Paul Egan of the Detroit News reports a group of teachers and other public sector workers are protesting Snyder's education cuts and tax policies. Egan quoted Jim Martin, a health and physical education teacher from Sault Ste. Marie, speaking about Governor Snyder:

"He says he's not anti-union or anti-teacher, but his actions say otherwise," Martin said at a news conference about a block away from the Grand Hotel where the policy conference organized by the Detroit Regional Chamber is being held.

The news conference was organized by A Better Michigan Future, a coalition of about 50 union and public interest groups...

"It can't be possible that everyone really believes that corporations need the money more than children," said Tammy Hazley, a special education teacher from Sault Ste. Marie Area Public Schools.

Egan reports the group is calling for a new state income tax, one where higher-income earners would pay more than lower-income earners. The group's director "also called for a reduction in the cost of work contracted out by state government."

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