$900 Million In New Taxes On Pensions And Other Retirement Income.

[+EdwardGlen]

fyi; Tax cuts don't create jobs they only add to the deficit and unemployment. Either we kiss this guy good-bye or your hard earned income.

 

Why Rick Snyder's budget plan has some Republicans saying 'tax cuts don't matter'

 

http://www.mlive.com/politics/index.ssf/2011/04/why_rick_snyders_budget_plan_h.html

 

In his aim to unite Michiganders around his plan to “reset” the state economy, you’d think Gov. Rick Snyder would have conservatives in the bag. Nope.

 

Groups from the Small Business Association of Michigan to the Michigan Chamber of Commerce are solidly behind Snyder’s proposal to cut business taxes by some $1.7 billion, with the prospect of $700 million more in future years.

 

But on the other side are anti-tax opponents who don’t like how it’s financed, especially the $900 million in new taxes on pensions and other retirement income.

 

How much they don’t like it will become clearer this week during Thursday’s Tea Party rally on the Capitol lawn. The Michigan chapter of Americans for Prosperity, helping to organize it, gives Snyder’s business tax cut an “A.” His income tax increase, however, gets an “F.”

 

Normally those who oppose taxes for ideological reasons and those who believe taxes hinder job creation are on the same page. Not anymore.

 

Business owners, still smarting from a badly written Michigan Business Tax made worse by a 22-percent surcharge, call Snyder’s plan a once-in-a-generation opportunity.

 

It’s the biggest piece in an employer’s agenda gaining momentum, given the speed other pro-business measures have been signed into law. Among them are the repeal of item-pricing rules and unemployment insurance tax breaks achieved by reducing maximum state benefits from 26 to 20 weeks.

 

But to finance a business-tax cut this huge, Snyder has to get the money from somewhere, namely more than $1.8 billion in additional income tax. His plan also seeks to eventually generate $700 million more annually, to fund future personal property tax relief, by halting planned income tax cuts.

 

It’s a massive shift in tax liability from businesses to individuals in the range of $2.5 billion. That’s why the conservative base of the Republican Party is split. And it’s why GOP lawmakers are in a jam.

 

When they return from their two-week break, they’ll face a tight, self-imposed deadline and the competing demands of their political allies: retirees who voted for them in the last election and some 95,000 business owners who like the prospect of not having to pay a state business tax anymore.

 

When Senate Republicans floated a proposal to bring all those employers back into the tax fold and reduce the amount of their relief, conservative editorial writers called them cowards. Small business lobbyists called it goofy.

 

Those lobbyists also know that searching for spare change in a budget already pared with steep cuts is a dead end.

 

On the other hand, Republican lawmakers have to assume the political effect of hiking the tax bills of senior voters can’t be good. To avoid that tough vote, some now are arguing the scale of business tax relief Snyder seeks won’t provide the economic jolt its backers in the business community say it will.

 

It’s not an unreasonable argument. Most of the job loss during the past decade had little to do with how Michigan taxes business. And if the MBT is such a job killer, why is net job growth rebounding so nicely since the low point in 2009?

 

New data from the Citizens Research Council of Michigan also suggests Snyder’s plan may not be a game-changer. State and local business taxes currently represent 42 percent of all taxes collected in the state, which ranks Michigan 35th nationally. Snyder’s plan would take that percentage down to 38 percent for a ranking of 45th.

Still, “tax cuts don’t matter” isn’t an argument you hear Republicans make often. The core of GOP ideology has long been to assert just the opposite — usually to slash spending or curb government growth.

 

Snyder has crafted a business tax relief plan far larger than any Michigan Republican before him. The difference is he’s determined to pay for it with an equally large income tax increase. And those tens of thousands of employers who would no longer have to file a Michigan Business Tax return as a result? They don’t care one bit.

 

E-mail Peter Luke: pluke@boothmichigan.com