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Michigan State Government Approves Higher Income Tax, Sales Tax Expansion

Michigan already has the highest unemployment rate in the nation, and with the state income tax going from 3.9% to 4.3% and an expansion of the sales tax, it's now only going to get worse. From Fox News:

The state Legislature agreed early Monday to raise the income tax and expand the sales tax to services in a historic deal with the governor that quickly ended a partial state government shutdown.

For just over four hours early Monday, fewer state police were on Michigan highways, campgrounds were closed, road construction projects and lottery sales were stopped, and more service interruptions were on the horizon for later in the day until the final pieces were sent to Democratic Gov. Jennifer Granholm.

The reason Michigan has such a terrible budget shortfall is that its taxes are already so ungodly high that people and businesses are moving out of the state, which is costing the state revenue. But the state legislature is too stupid to understand this and continues to raise taxes in an effort to raise more revenue.

This is how the crucial votes came down:

Some of the toughest votes were for tax increases, especially in the Republican-led Senate.

The Senate split 19-19 twice, forcing Lt. Gov. John Cherry to cast the tie-breaking vote in favor of the income tax bill and expanded sales tax to cover some services.

Four Republican senators voted for the higher income tax -- Patricia Birkholz of Saugatuck, Tom George of Portage, Ron Jelinek of Three Oaks and Gerald Van Woerkom of Norton Shores. Democrats Glenn Anderson of Westland and Dennis Olshove of Warren voted against the income tax increase.

Three Republicans senators -- Jelinek, Valde Garcia of Howell and Wayne Kuipers of Holland -- voted to expand the sales tax to services. Anderson was the lone Democrat opposing the sales tax expansion.

The House passed the income tax measure 57-52. Democrats hold a 58-52 edge in the House, but three Democrats -- Martin Griffin and Michael Simpson of the Jackson area and Lisa Wojno of Warren -- voted against it. Two Republicans, Chris Ward of Brighton and Ed Gaffney of Grosse Pointe Farms, voted in favor of the proposal.

No House Republicans voted for the bill placing the 6 percent sales tax on services -- a proposal stiffly opposed by the business community. All Democrats did, except for Reps. Marc Corriveau of Northville and Kate Ebli of Monroe, who voted no.

This makes Jeff Daniels' ad touting Michigan's pro business environment more of a joke than ever. National Review's David Freddoso points out some alarming statistics:

Michigan has now lost net jobs two years in a row. Its unemployment rate is a staggering 7.2 percent, the highest in the nation (only Mississippi comes close with 6.7 percent). Between June and July, the state lost 20,000 jobs. It has lost 70,000 since July of last year. Michigan also ranks third in home foreclosures, with almost 14,000 new filings in July.

Between state and local property taxes, sales taxes, income taxes, and business taxes, the state of Michigan siphons off 11.2 percent of its state's economy -- above the national average, according to the Tax Foundation. With few jobs and high taxes, it's hardly surprising that Michigan's population declined last year -- not just in proportion to the other states, but an actual decrease of 5,000. Meanwhile, the state has been buying nationwide ads daily on CNBC, in which actor Jeff Daniels urges entrepreneurs to move their businesses to Michigan. Another version of the same ad runs on local stations, urging business owners to stay in Michigan

It's a pretty sad state of affairs.


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Comments (17)

This makes Jeff Da... (Below threshold)
jpm100:
This makes Jeff Daniels' ad touting Michigan's pro business environment more of a joke than ever
Why do those commercials run so often in Michigan? I thought the idea was to attract business to Michigan from outside.

Or are they there to make it look like Granholm is doing something? In which case, Michigan is where they would have to run.

The ads by Jeff Daniels was... (Below threshold)

The ads by Jeff Daniels was the first thing that came to mind for me as soon as I saw the title of the post. What hogwash.

They are running radio spot... (Below threshold)
Paul:

They are running radio spots in New Orleans... It's quite silly.

Nobody from down here is going to move to Michigan. For one, it's TFC. Too Freaking Cold.

Explains why we have so man... (Below threshold)

Explains why we have so many Michiganders shopping on Michigan Avenue in Chicago this past weekend.

"Nobody from down here is g... (Below threshold)
markm:

"Nobody from down here is going to move to Michigan. For one, it's TFC. Too Freaking Cold."

Actually, it's pretty warm at the moment. January and February can get a wee bit dicey though.

But yes, other than the cold there really isn't much reason to come here anymore.

Prepare for crash landing .... (Below threshold)
bill-tb:

Prepare for crash landing ... Liberals are so predictable, logic is their enemy and the truth is their terrorism.

Raise taxes, fund socialism and gun control. Democrats, not hard to understand at all.

Sucks to be us...T... (Below threshold)
P. Bunyan:

Sucks to be us...

Thanks you 1/2 million professional entitlement recipients in Wayne County.

Killing the goose that laye... (Below threshold)
ODA315:

Killing the goose that layes the golden eggs.

Yep, good logic. Raise tax... (Below threshold)
BillyBob:

Yep, good logic. Raise taxes even more on the remaining population and drive those folks out too.

What will Michigan do when everyone is on the dole but there are no real worker there to pay taxes?

Don't worry, Dearboristan and New Falluja will help with infusions of Saudi cash.

I left when as a private bu... (Below threshold)
epador:

I left when as a private business owner I was also paying a Small Business Tax calculated on my GROSS income (my net income was about 25% of my gross - and I only had 3 part-time employees).

Nah, they're all leaving because of global warming.

I stole 2 licensed professionals from MI in the past 6 months. Its like shooting ducks in a barrel.

epador: I feel your pain. ... (Below threshold)

epador: I feel your pain. I was a small business owner during the Clinton years.

Michigan Dems got used to t... (Below threshold)
hermie:

Michigan Dems got used to those cushy auto industry jobs supplying the votes and the revenue. When they started feeling the crunch, they pushed for gambling.

Now, they let the infrastructure go to pot, their schools aren't work squat, their industry is either moving away, and the people who can leave are fed up with being taxed to death. The lawmakers' solution: Jack up taxes even more and spend money on tv ads.

From Rush today...telling e... (Below threshold)
DCW:

From Rush today...telling everyone that at least Michigan will be a lesson in what will happen if
we get Hillary....

"Michigan solves its government shutdown with a "compromise" every left-wing lawmaker loves: a tax hike! This is the last thing that state needs, and foreshadows what we'll get from a Governor Granholm-type in the White House."

Michigan is on the verge of... (Below threshold)
Bob:

Michigan is on the verge of taxing several more services if not now then in the future just like Ohio did. I am still amazed that there is still no tax on labor charges for repairs. I'm pretty sure several states have this. And that is part of the Streamlines Sales tax for the future? Which will never happen

And before you can say JACK... (Below threshold)
Spurwing Plover:

And before you can say JACK ROBINSON they will be taxing everything including the kitchen sink

Granholm is just keeping he... (Below threshold)

Granholm is just keeping her campaign promise that Michigan would be 'Blown away.'

THEY'RE KILLING GOLDEN G... (Below threshold)
Ian Author Profile Page:

THEY'RE KILLING GOLDEN GEESE IN MICHIGAN

What has happened is that Michigan - under liberal, central-planning leadership that seeks to pick "winners and losers," - has pressed for bigger and bigger programs, costing more and more tax dollars.

Business - the Golden Goose that provides jobs - has been choked, and is wobbling to get out from under the choke hold by crossing the state line.

Michigan consumers have been paying business's taxes in HIGHER PRICES, a neatly hidden tax that the politicians figured could go on forever.

When Michigan chose Jennifer Granholm, after the first miserable four years, instead of a person who understood about how Golden Geese propagate, what did they expect? And to add insult to injury, they gave the Michigan House away to poltical types that feel oh so comfortable taking from the producers to build a captive constituency.

There is a long-term solution for Michigan voters: It's called scrapping the Michigan Income Tax, and enacting the Michigan FairTax. Under the FairTax, Michiganders, visitors - even illegals - will pay for government the way Michigan working families are paid, when something is sold.

Under a Michigan FairTax, no more politicians' hands in our family paychecks; no more politicians' hands in our business checkbooks. No more income tax code to harass families with audits, interest, penalties, even confiscation of personal property.

Under a Michigan FairTax consumption tax, Michigan families pay for government in the process of meeting their family's needs. And every Michigan resident family will receive an advance monthly reimbursement on taxes expected to be paid on poverty-level spending based on family size. Thus, it is a progressive tax system, yet voluntary because it will apply only on new retail purchases, not used, and on services.

The Michigan FairTax is a revenue neutral proposal that will put Michigan workers in charge with information on the cost of Michigan government on every retail receipt! And, the politicians will no longer be able to pit poor against rich, individual/family against business.




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