McNeilly: Repeal Michigan’s income tax

Greg McNeilly

Presumably state government in Michigan wants people to show up at work every morning, to earn a paycheck, provide for their families and pump cash into the economy. So why does Lansing punish Michiganders engaged in the noble pursuit of work and craftsmanship?

Well, it may not much longer, given the exciting news last week out of the state capital.

Before the newest members of the Legislature had even found their seats, state Sen. Jack Brandenburg announced plans to kick off the new term with a bill to phase out the state’s punitive, 4.25 percent income tax over the next five years.

Shortly after kicking off the first session day of 2017, Speaker Tom Leonard and Rep. Lee Chatfield announced the first bill of the year in the lower chamber, legislation to — you guessed it — eventually phase out the $9 billion-a-year income tax.

The income tax is state government’s war on workers, and it makes all the sense in the world to end it.

Under former Gov. Jennifer Granholm, Michiganders saw the income tax skyrocket. Jobs disappeared almost overnight, and so did residents. Why live and work in Michigan when Lansing punishes you for it?

That’s the thing. Tax policy isn’t just a revenue generator, it’s also a tool for social engineering. When it comes to government’s influence on its citizens’ behavior, there’s a rule as old as time – if you want less of something, just tax it.

Don’t like smoking? Raise the tax on cigarettes. Want a company to build its products at home instead of overseas (or south of the border)? Increase tariffs. Just the threat of increased import taxes from President-elect Donald Trump over the last few weeks has already yielded significant domestic job creation announcements, and forced big companies to formally cancel foreign development plans.

In the same way, taxing income punishes workers, and it diminishes incentives to get a job, put in a few extra hours, or get ahead at the plant.

Predictably, the radical left is outraged at the idea of allowing working men and women to keep more of the money they earn. “What about the budget?” “Government can’t ‘afford’ it.”

The truth is, income tax relief is long overdue. Just look at the numbers.

In the last decade, the state government’s budget has jumped roughly 30 percent – an increase of more than $12 billion. According to budget figures from the Michigan Senate Fiscal Agency, for fiscal year 2006-07, state government’s budget came in at $41.9 billion. By 2016, that budget had grown to more than $54 billion.

Not surprisingly, state government spending also outpaces personal income growth for Michigan workers, and at a time when the state’s population remains smaller still today than it was back in 2006.

Putting workers back in charge of their own paychecks is the right thing to do, and it’s the kind of big, common sense move that will take the state’s economy to the next level.

Eliminating the income tax would make Michigan a national leader when it comes to attracting the best and brightest workers from around the world, keeping our college graduates here at home and luring businesses in search of high-skill talent. The move would also set us apart from our neighbors in the Midwest, making Michigan the first state in the region to take job creation and talent attraction seriously enough to end its war on workers.

It’d mean more money in workers’ pockets, more money pumped into the economy, and a more responsible state government.

Michigan workers are taxed too much. They work hard enough to earn a living. Lansing shouldn’t punish them for it.

Greg McNeilly is chairman of the Michigan Freedom Fund.