Whitmer, Thanedar unveil jobs and tax plans at business confab

Jonathan Oosting
The Detroit News
Democratic gubernatorial candidates Gretchen Whitmer, left, and Shri Thanedar on Tuesday, May 29, 2018, unveiled their economic plans for Michigan.

Mackinac Island — Individuals bear too much of Michigan’s tax burden, Democratic gubernatorial candidates Gretchen Whitmer and Shri Thanedar said Tuesday as they rolled out new economic plans and raised the specter of possible tax code changes.

Thanedar was heading to the annual Mackinac Policy Conference with a new proposal that could rile business officials arriving on the island ahead of the Wednesday kick-off. The Ann Arbor entrepreneur wants to eliminate income taxes for low-income residents but raise taxes $3.6 billion on corporations and wealthy individuals to pay for "people-friendly" programs, including universal child care, universal preschool and paid family leave.

Whitmer did not detail a funding source for her plan, which calls for $100 million a year in new spending to create new college scholarships and skills training programs. The former Senate minority leader from East Lansing said she is not ruling out tax code changes but is confident there is enough wiggle room in the current $56 billion state budget to fund her jobs proposal.

“There’s plenty of things that are going to require investments, from infrastructure to K-12 schools, but this kind of investment is manageable,” Whitmer told The Detroit News. “Everyone you talk to knows that if we’re going to grow our population and grow our incomes, we’ve got to have skills.”

Whitmer’s proposal would fully fund two years of community college, university classes or skilled trades training for Michigan students who complete eight hours of community service per marking period and meet certain performance and attendance objectives in high school. Her related Michigan Reconnect Plan would help finance two years of training for adults.

“Education doesn’t end with 12th grade, and we have to really change our culture so that people understand that lifelong education is important,” Whitmer said.

Thanedar’s “One Michigan” agenda includes policies he said would help 300,000 Michigan women who have left the workforce, primarily because of the high cost of child care combined with stagnant wages.  

The plan includes creating a universal child care program his campaign estimates would cost $3.45 billion over two years. Thanedar also wants to spend $495 million a year on universal preschool for three- and four-year-olds.

To pay for the programs, the millionaire entrepreneur wants to scrap flat corporate and income tax rates in favor of a graduated system. Under his proposal, the state's six percent corporate tax rate would jump to 7.5 percent for companies with at least $350,000 in gross receipts and to 10 percent for companies with at least $1 million in gross receipts.

The 4.25 percent personal income tax rate would be eliminated for individuals who earn less than $50,000 annually but increase to 8.85 percent for someone earning $200,000 or more and to 10 percent for individuals who earn more than $1 million.

“I want to think big here, come in with a bold idea and say to the business people on Mackinac Island that you guys need to chip in,” Thanedar said in a phone interview as he drove toward the island ferry. “You had it too good for too long. You need to chip in. We’re all in this together.”

Moving to a graduated personal income tax rate would require voter approval to amend the Michigan Constitution. Other changes would require cooperation from the state Legislature, where Republicans are expected to retain control of the state Senate and will defend a slimmer majority in the House.

Those dynamics would complicate Thanedar’s tax overhaul plan, but in the governor’s office, he’d “have the leverage to get some of these people-friendly policies implemented,” Thanedar said.

Whitmer’s jobs plan includes several Michigan Democratic Party staples: Repealing Michigan’s right-to-work law, which prohibits employment contracts requiring union dues or fees, protecting prevailing wage construction rules and enacting “strong” paid family leave policies.

Whitmer opposed a 2011 tax code overhaul spearheaded by term-limited Republican Gov. Rick Snyder that cut tax rates for corporations and exempted many small businesses but effectively raised rates on some individuals by eliminating certain exemptions and credits. The East Lansing Democrat is not proposing any specific changes at this point. 

“We need to make this a place talent wants to come live, but we also need to make this a place where we grow talent within our borders,” she said. “. I think we all need to have some skin in the game. I’m not putting anything on or off the table at this point on that front.”

Whitmer and Thanedar are competing for the Democratic nomination with former Detroit health director Abdul El-Sayed, a favorite of the progressive left. He is aggressively courting voters who backed Vermont U.S. Sen. Bernie Sanders in Michigan’s 2016 presidential primary.

All three Democrats have proposed gradually raising Michigan’s $9.25 minimum wage to $15 per hour.

El-Sayed has also proposed college affordability and job training programs. The Shelby Township Democrat rolled out his “rural agenda” last month, calling for expanded broadband access, affordable housing and increased access to health care providers.

Thanedar proposed paying for a new family leave program through a “rider” on existing insurance policies that would total roughly $63 per year. The plan would allow for 12 weeks of paid leave at 50 percent wages for residents to care for a sick family member, be present for childbirth or recover from a serious health issue.

Whitmer’s plan includes creation of the nation’s first state Department of Mobility and Connectivity to usher in a future that includes autonomous and connected vehicles. She wants to partner with automakers and ridesharing companies on a pilot program to make a fleet of autonomous vehicles available for use by the public in urban areas.

Whitmer also proposed creation of a publicly administered retirement system that privately owned small business could join to provide more affordable retirement benefits to their employees. It costs twice as much for a small business to provide 401(k) retirement saving plans than it does a large corporation, according to her campaign, which says pooling employee contributions would lower costs.

Whitmer's plan includes rebooting the Michigan Youth Corps mentorship program, working with the U.S. Department of Labor and National Guard to boost employment opportunities from veterans and enacting strong Buy American and Buy Michigan first policies for state contracts.

Republican Bill Schuette, the state’s attorney general now running for governor, blasted Whitmer’s jobs plan as a ticket to “The Lost Decade Part 2,” a reference to economic woes under former Gov. Jennifer Granholm, a Democrat whose tenure coincided with the Great Recession.

Schuette has made proposed tax cuts a staple of his gubernatorial campaign and said Whitmer is “following the high tax, big government footsteps” of Granholm. His campaign also released a new online attack ad criticizing Whitmer and Schuette’s GOP primary rival, Lt. Gov. Brian Calley, on tax policy.

Whitmer campaign spokesman Zack Pohl said the ad shows “Schuette is getting desperate and going negative on Gretchen Whitmer because he’s behind in the polls and his record on the economy is truly abysmal.”

Gubernatorial candidates will share a stage Thursday event at the Mackinac Policy Conference for a bipartisan debate.