Tax Equality Vital to Michigan’s Future
We hear a lot about “metrics” these days, but you won’t find these on Gov. Snyder’s dashboard – Michigan ranks 29th in personal tax equality and 48th in the percentage of tax revenue contributed by businesses, according to the Institute on Taxation and Economic Policy and the House Fiscal Agency.
Why is it that an impoverished family living in Flint making $10,000 a year and a working-class family in Howell making $50,000 contribute 9.2 percent of their hard-earned money each year, while a billionaire contributes less than 5 percent toward an education system, workforce and infrastructure that helped him accumulate personal wealth?
In a nation founded on the principal of equality, how is it that those who can least afford it contribute the highest percentage, while those who accumulate unimaginable wealth contribute half as much to the state that helped provide them with the resources and opportunity to pursue their dreams?
The answer is we rely too heavily on regressive sales and property taxes that excessively shoulder working families with the responsibility of funding the essential services we all need.
While working-class families do more than their part to invest in Michigan’s future, corporations and the wealthiest 1 percent are not contributing their share to a state that educates their workforce, maintains the roads on which their goods move and provides healthcare to their low-income employees.
In 2011, Gov. Snyder and legislative Republicans’ top priority was to repeal the unpopular Michigan Business Tax. The “reforms” they pushed through made an unfair system worse by creating the largest tax shift – from corporations onto individuals – in state history.
Since the tax shift took effect in 2012, working families and retirees have seen their taxes increase by over $4 billion, according to the House Fiscal Agency.
As a result, businesses contribute only 36 percent of state and local tax revenue – 48th in the country – while working families contribute more than their fair share of the remaining 64 percent.
Now, Republicans in the Legislature want working families to pay for another handout for the wealthiest 1 percent. Last week, House Republicans announced a plan to reduce, or even eliminate, our income tax, the only tax that doesn’t disproportionately hurt working-class families.
Rather than further enriching millionaires and billionaires, we need to come together to address runaway tuition rates, fix our broken infrastructure and help our children succeed.
A graduated income tax, which has been adopted by 35 other states and the federal government, is an essential step in that direction.
Properly structured, a graduated income tax would equalize the effective tax burden on all Michigan residents by cutting taxes for 95 percent of Michiganders – families making $165,000 a year or less – and increase rates gradually on the top 1 percent.
A graduated income tax would provide additional revenue to:
- Help restore our crumbling infrastructure
- Ensure safe and sustainable communities
- Provide our children with the education they need to realize their fullest potential
- Lower tuition rates to ensure graduates aren’t burdened by unimaginable debt
Our state Constitution, however, currently prohibits a graduated income tax. This must change to achieve tax equality.
Adjusted for inflation, Michigan’s median household income has declined by $15,633 (24 percent) since 1999, and none of the recent reforms have done anything but make the problem worse by shifting taxes onto working families and retirees, and cutting the essential services we need to compete for jobs.
How will future generations of entrepreneurs and workers pursue their dreams when our state lacks the education system, workforce, infrastructure and other essentials that businesses and employees rely on to foster economic growth?
A graduated income tax is a responsible and fair way to equalize the tax burden and capture the revenue our state needs to create shared prosperity in the 21st century.