Our Editorial: ‘Fair tax’ for roads goes wrong way
Coalition’s proposal would hurt state competitiveness, funding might go elsewhere
A newly formed coalition, Citizens for Fair Taxes, has presented an abysmal solution for fixing Michigan’s roads: raise the corporate income tax to 11 percent from 6 percent in a $900 million tax hike on the state’s job creators.
The proposal is a ramped-up version of legislative Democrats’ proposal to raise the corporate income tax to 9 percent in a move that would raise $530 million.
If either group succeeds in getting better roads from these tax hikes, it’s likely the first users would be Michigan businesses as they haul out of town, perhaps to neighboring Ohio, which has no corporate income tax.
This proposal should be a non-starter for Michiganians who lived through the Lost Decade. Everyone remembers all too well double-digit unemployment and the massive disinvestment in the state.
One of the most productive reforms the state has enacted in the past decade has been to eliminate the onerous Michigan Business Tax and replace it with the Corporate Income Tax. Growth since the 2011 change has been substantial.
More than 400,000 new private sector jobs have been created since 2010, and the state has cut its unemployment rate by more than half. According to the Tax Foundation, Michigan ranks 13th in the country for overall tax climate, up from 17th place in 2011, and 10th for corporate tax climate. Gross Domestic Product, per capita income and jobs have grown faster than the national average.
Fixing the roads shouldn’t mean rescinding this progress by instilling the second-highest state corporate tax rate in the country.
Certainly the Legislature will balk at the coalition’s proposal, should it get enough signatures to be presented to lawmakers. If the Legislature does nothing with the proposal, it will be on the ballot in November 2016.
Michigan roads in poor condition have risen to nearly 38 percent, according to the Michigan Transportation Asset Management Council.
Citizens for Fair Taxes includes several construction unions — the Michigan Regional Council of Carpenters and Millwrights, Operating Engineers, and Michigan Laborers — that stand to benefit from the funds. But eliminating other jobs in the state is no way to solve their problems, or fix the roads.
Additionally, the state constitution doesn’t guarantee the Legislature must use revenue from corporate taxes to fix the roads, per a ballot proposal.
The proposal would ruin Michigan’s competitiveness, and the state might still have the same problem voters had with earlier plans that didn’t require revenue to go specifically toward roads.
No one is happy with Michigan’s roads — or the fact that there’s yet to be a solution to fixing them — but this is one proposal that should be stopped in its tracks.