Unions push near doubled corporate tax to fund roads

Gary Heinlein
The Detroit News
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Lansing — A union-backed coalition said Thursday it will seek a 2016 ballot proposal to nearly double Michigan’s corporate income tax, creating $900 million in new revenue for an increase in the state road repair fund.

Similar to a plan unveiled by House Democrats last week, the ballot measure would boost the corporate tax on profits from the current 6 percent rate to 11 percent. Supporters would have to gather at least 252,523 valid signatures from registered voters to put the citizen initiative in play.

“Corporations are getting away with not paying their fair share and Michigan families are shouldering the burden,” said Tom Lutz, head of Citizens for Fair Taxes spearheading the ballot drive.

Lutz said the goal is to shift more of the tax burden back to businesses, especially since House GOP lawmakers are talking about eliminating the state’s earned income tax credit as part of their roads plan.

Gov. Rick Snyder and lawmakers four years ago scaled back the tax credit, available for 800,000 low-income working families, from 20 percent of the federal rate to 6 percent. Other individual income tax breaks also were reduced as part of the state budget realignment strategy.

The carpenters, operating engineers and laborers unions are involved in the ballot petition effort. Lutz said many others are expected to join.

Proposed petition forms have been submitted to the Board of State Canvassers for review, said Lutz who also is financial secretary for a Millmen, Lathers and Resilient Floor Decorators local union and a board member of the Michigan Regional Council of Carpenters and Millwrights.

The Michigan Chamber of Commerce said Michiganians should “think long and hard” about signing petitions for a “dangerous” proposal.

“At a time when Democrats and Republicans and business and labor should be working together in the legislative process to fix the roads, it’s sad to see a union ... politicize the debate over transportation funding with the threat of an anti-business ballot proposal,” Chamber President and CEO Rich Studley said in a statement.

A conservative group also blasted the idea.

“Proponents of this ballot proposal want to put the ‘closed for business’ sign back on Michigan,” said Pete Lund, state director of Americans for Prosperity-Michigan and a Republican former state lawmaker. “Even if the roads get fixed, there won’t be anyone left in our state to drive on them if this proposal succeeds.”

If the effort to gather enough signatures is successful, the proposal first would go to the Legislature, which would have 40 days to act or let it go to the November 2016 general election ballot. Majority legislative Republicans, who already have blasted the House Democrat plan, presumably would let it go to the ballot.

Snyder and the Legislature also slashed the business tax in 2011. They repealed the old Michigan Business Tax, except for businesses with outstanding tax credits, and replaced it with the corporate income tax.

The initial reduction in the business tax was more than 80 percent. The MBT had raised about $2 billion annually; now combined business taxes raise about $500 million. Most of the lost revenue was regained by ending some taxpayer income tax credits and extending the income tax to pension income.

Firms generated $906.4 million in business income taxes in fiscal 2014. But after some businesses got $768.8 million in refunds from older tax credits they received, the net take for state government was $137.6 million — less than the $290.5 million in “sin” taxes paid by smokers and drinkers.

Republican lawmakers and business groups note, however, that businesses also pay taxes on property, fuel, utilities and supplies. Of course, individuals also pay property, sales, fuel and utilities taxes.

The state needs at least an estimated $1.2 billion more a year for repairs of Michigan roads and bridges, but lawmakers are stymied in their latest effort to agree on a plan.

The $900 million in new revenue that the coalition proposes would cover three-quarters of the $1.2 billion minimum needed for roads.


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