Schauer shifts on business tax move

Chad Livengood
Detroit News Lansing Bureau
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Lansing — Mark Schauer has made Gov. Rick Snyder’s $1.8 billion tax cut for businesses a centerpiece of his campaign for governor, blaming it as one of the reasons taxpayer funding for public schools is not keeping up with expenses.

Schauer has called Snyder’s 2011 elimination of the Michigan Business Tax a “corporate tax giveaway,” even though 95,000 small and medium-size businesses — not large corporations — were relieved of paying any state taxes on their profits.

But the former congressman from Battle Creek has backed away from comments made last week to a group of reporters that he would be open to “potentially broaden” the base of business taxpayers and lower the overall corporate income tax rate, which is 6 percent.

“It’s clear that this governor’s priority was a $1.8 billion corporate tax giveaway, whether businesses created jobs or not,” Schauer said Tuesday in an interview on the “Michigan’s Big Show” radio program. “I’ve not announced any changes to Michigan’s corporate income tax.”

Schauer has previously suggested businesses aren’t paying their “fair share” to maintain roads or educate future employees.

“What I would say generally is we all need to share in the responsibility for our schools,” Schauer told The Detroit News on Friday after touring a Dearborn elementary school. “Businesses need talented, trained workers. For Michigan to win in a global economy, we need the best workforce.”

In mid-September, Schauer told The News that businesses “need to be part of the revenue solution” to fix the state’s roads.

With less than two weeks until voters decide whether to give Snyder another term, the Republican incumbent is not shying away from boasting about his business-friendly tax policies, which shifted more of the burden of paying for state government to individuals.

On Tuesday, the conservative Tax Foundation bestowed Snyder with its “Outstanding Achievement in State Tax Reform” award for the second consecutive year.

Snyder contends the MBT — which both Schauer and Lt. Gov. Brian Calley voted for in the Legislature — created a double tax on a business’ profits and then on the individual earnings of the owner. Under the new system, the owners of s-corporations, limited liability corporations and sole proprietors pay only the 4.25 percent individual income tax.

“We asked our business people to pay a fair amount of tax,” Snyder said, “because it was an undue burden on small and medium-size businesses, who are our job creators. They already pay tax through the individual income tax.”

Snyder’s 2011 tax reform led to the elimination of popular tax breaks for individuals, including getting rid of a $600-per-child tax credit. It also reduced payouts on homestead property and earned income tax credits, and made more pensions subject to the income tax. The tax changes are raising an estimated $1.2 billion more annually from individual taxpayers.

“We had a big deficit we had to address,” Snyder said Tuesday.

Since the 2011 changes, Michigan has moved from No. 49 on the Tax Foundation’s index ranking for corporate tax rates to No. 9. Michigan ranks No. 14 for the state’s overall business tax climate, which includes property and unemployment insurance taxes.

Joseph Henchman, vice president of legal and state projects at the Tax Foundation, credited Snyder for paring back film tax subsidies, which he called “handouts for Hollywood.”

Henchman said Snyder’s tax changes eliminated a “system where taxes vary by type of business and political connection ... representing a system where all parties get the same tax treatment and it’s transparent what people pay and what people owe.”

But Democrats contend the tax shift to families and retirees was not fair to them and hasn’t led to a considerable shift in the economic fortunes of most Michiganians.

“Who’s shouldering the burden right now? Seniors, who are paying pension tax. Kids with the education cuts,” said Lon Johnson, chairman of the Michigan Democratic Party.

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