Opinion: Tax hike coalition hides behind lobbyist reforms

Charles Owens

A new coalition seeking to raise taxes on Michigan citizens and small business has cloaked its mission behind the veil of “closing lobbying loopholes." At a recent press conference at the state capital, the “Coalition to Close Lansing Loopholes” (led predominantly by the liberal activist group Progress Michigan) demanded reforms to Michigan’s lobby laws that included claims that businesses in the state are not “paying their fair share” of taxes.

This Feb. 13, 2019, file photo shows multiple forms printed from the Internal Revenue Service web page that are used for 2018 U.S. federal tax returns in Zelienople, Pa. IRS data released Thursday, April 25, shows that while the average refund fell, the tax filing season was largely unchanged by the massive tax overhaul.

During the press conference, a pie chart mascot was trotted out to provide a visual for the organization’s narrative that only 4% ($866 million) of the overall state budget is paid by businesses and corporations.

The Progress Michigan spokesperson for the coalition threatened a ballot proposal for the 2020 election if the Legislature did not act on their demands.

While pulling data from the House Fiscal Agency 2018-2019 State Tax Revenue Overview report makes it easy for their pie chart mascot stunt, it also understates the real taxes paid by Michigan business and, in particular, the state’s smallest businesses.

A report commissioned in early 2019 by the National Federation of Independent Business sheds much more sunlight on the taxes paid by Michigan business. The study (done by the Anderson Economic Group) points out that the business tax numbers used from the House Fiscal Agency do not reflect the fact that many small businesses pay their business taxes through the individual income tax.

Breaking that number out and including it in business taxes paid doubles the 4% number to 8% based on available 2016 data, and it is likely to be just over 9% when the breakout data is available for 2018-19.

But the taxes that Michigan businesses pay do not end there. Also missing from the data used in the press conference are the “other” taxes paid by Michigan businesses including: local property taxes (another $4 billion), sales taxes paid by business (almost $3 billion of the $7.5 billion collected), unemployment payroll tax ($1.4 billion), selective sales taxes ($754 million), license fees ($542 million), motor fuels sales taxes ($143 million), public utilities sales taxes ($100 million), and severance taxes ($24 million).

The grand total in 2016 numbers (latest data available for this in-depth study) comes to $14 billion, or a third of the $41.8 billion of total taxes collected by state and local governments in Michigan that year.

While the percentage of taxes paid by business in Michigan will always be a subject of debate, the difference between 4% and 34% makes it clear that the “Coalition to Close Lansing Loopholes” is more interested in pushing their tax hike agenda than accurately informing the public.

It should come as no surprise that the primary backer of this coalition is also on record as supporting increasing taxes on Michigan citizens by changing our current income tax to a progressive income tax like the high-tax states of California and New York and expanding our sales tax to include services.

Michigan businesses are the job providers in our state. The record low unemployment rates and rising personal incomes in Michigan are evidence that we are on the right track with our current tax and fiscal policy. Hiding behind “lobby reforms” to push ballot initiatives that pursue the confiscatory tax policies that created Michigan’s “lost decade” of misery and economic calamity is a disappointing prelude to the upcoming elections season. Michigan’s citizens deserve better.

Charles Owens is the state director for the National Federation of Independent Business in Michigan, and a co-chair of the Small Business for a Better Michigan Coalition.