Michigan
Corporations to Pay $0 in Taxes This Year, Despite Crises in Flint and Detroit
While residents of beleaguered Flint face rate hikes for
the city's lead-poisoned water and Detroit sees teachers staging sickouts after
lawmakers threatened to withhold their full salaries, the state treasury
announced this week that Michigan businesses are to effectively pay nothing in
taxes this year.
In fact, Michigan is projected to give corporations a net
refund—even while it faces a budget shortfall of $460 million.
"Officials are projecting a net loss of $99 million in
revenue from the state's principal business taxes,"reported Detroit
News, as corporations "effectively contribute nothing to the state
coffers in 2016."
This shortfall "should be a wake-up call for Lansing
Republicans hell-bent on smothering government with cuts and miserly policy—and
it shouldn't be an excuse for lawmakers to withhold necessary help from the
(mostly poor, mostly black) City of Flint and Detroit Public
Schools," argued the
editorial board of theDetroit Free Press.
The cause of the budget shortfall is a confluence of recent tax
code rewrites: automakers and other large companies have continued to take
advantage of enormous tax credits enacted after the Great Recession in an
attempt to keep jobs in the state, while under Republican Gov. Rick Snyder the
state's Corporate Income Tax was rewritten in 2011 to cut business taxes to a
flat 6% rate at the same time that it increased personal income taxes and the
sales tax. (Policy experts have previously argued that
this change not only unfairly burdened individual taxpayers but also failed to
instigate the job growth it was intended to.)
Corporate tax credits will drain $1.03 billion from the state
this year, reports Detroit News, while revenue from the Corporate
Income Tax is projected to only total $932 million. The state treasury
indicated that a 20-percent drop in annual business revenue was to blame for
the nearly $1 billion net loss in corporate tax income.
Meanwhile, personal income taxes are expected to bring in about
$9.4 billion, sales tax about $7 billion, and $950 million and $850 million are
expected to be collected from the so-called "sin taxes" on alcohol
and the state lottery.
"Fuel taxes and registration fees are also set to increase
next year as part of a new road funding plan that critics say does not go far
enough to reverse deteriorating conditions," Detroit News writes.
"It's a real problem when people are footing the entire
bill and still not getting good services," Democratic State Senator Curtis
Hertel Jr. told the local news outlet.
"We should be frustrated. We should be angry."
The Detroit Free Press argues that state
lawmakers actually have the means fix the budget shortfall—they just don't want
to:
Here's
the final irony: The state's rainy day fund contains sufficient dollars to plug
this budget hole. But we're pessimistic.
Some
House Republicans seemingly believe they owe nothing to either
Flint's 100,000 residents, or Detroit's 47,000 students. We fear the
looming shortfall will provide them political cover to shirk their
obligation to those Michiganders.
But here,
political cover is analogous to cowardice. And the kind of craven policy-making
that will do real harm to some of the state's most vulnerable citizens. There's
no excuse for that.
Indeed, local news outlet MLive points out that
state lawmakers have already indicated that the budget hole may mean that Snyder's proposal to
allocate $195 million to help Flint cope with its water crisis is
at risk.
"With big cuts needed," MLive reported,
state budget director John Roberts "said everything was on the
table."
"I would say right now from our end everything's on the
table. We're going to look at the Flint commitments very seriously,"
Roberts said.
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