GOP Bill Is Poor Apology Not Tax Relief

October 31, 2005
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Businesses are “taxed to death,” noted Grand Rapids Area Chamber of Commerce Public Policy and Government Affairs Director Jared Rodriguez, as he and representatives from the West Michigan Chamber Coalition hosted regional Republican lawmakers unveiling a 12-bill package designed to cut red tape and reduce bureaucratic costs to businesses.

Participating lawmakers each took a turn admitting the state needed to provide tax relief to “job providers.” The remedies offered, however, do not lessen any business tax burden, and in fact are a poor way to apologize for bureaucratic ineptitude that those taxes are used to continue to fund. It was an admission of the cavalier disregard for those carrying the brunt of the tax load.

In brief, the package of bills creates legislation to protect employers from “unreasonable” delays on tax decisions, allows businesses to settle disputes directly with the state Treasury, and requires the state to notify employers if they’ve over paid taxes. One might ask why legislation need be created to provide such basic methods of communication — legislation to force bureaucrats to do their job.

On the local level of government, in almost every state, elected city leaders are given specific but varying methods to reduce the tax burden incurred by businesses. This has most recently come to be known as tax abatement, or “corporate welfare” in some vernacular. Such abatements are admissions by state governments that the tax liability put upon business is admittedly discouraging (at best), and under the right circumstances can be abated, for a short time. Too bad the local government suffers the greater loss of revenue, even while it is state policy that creates the inequity. In this way the local governments become trapped in the state’s ineptitude; a double whammy whereby possible new revenue from corporate growth is delayed, and during an economic downturn (it rhymes with Michigan) local governments have their state revenue sharing cut off, too.

Over and again, respected national and regional analysts and tax specialists have identified Michigan as a state with the highest business tax burden in the country. Retiring Comerica Chief Economist David Littman told the Michigan Chamber of Commerce this spring, “The (Michigan) tax burden, especially in the corporate field, is way above the norm for the U.S., not to speak of our competitors in Asia. We’ve got the highest corporate tax rate of any developed country, and Michigan’s tax burden on top of that …” Hillsdale College economist Gary Wolfram frankly added another chilling chapter to what will empty Michigan coffers: “Twenty years ago I couldn’t put a call center in India. Now I can. Twenty years ago I couldn’t make shoes in China. Now I can. …” He and most business owners have read at least a part of the New York Times bestseller “The World is Flat.” It should be required reading for legislators.

Political dog-and-pony shows must stop, and state policy leaders must get to work on the serious issues affecting Michigan business leadership’s ability under the current tax structure. They can’t ignore this elephant any longer. If they do, the lights won’t be on in the Capitol, and legislators won’t have jobs. That makes them losers.    

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