Towards the end of his first year in office, Michigan Governor Rick Snyder suggested the changes he and the Republican-led legislature had made were necessary for the good of the state, but that these changes also represented "shared sacrifice." Bear in mind, what that meant was a nearly $2 billion tax cut for corporations and a tax increase of $2 billion for around 50 percent of Michigan residents, with the bulk of the sacrifice coming from the working poor and senior citizens.
Among the lies politicians tell their constituents, the "shared sacrifice" rhetoric is one of the most insulting. What they are really saying is that they are going to raise taxes on those who can least afford it in order to give tax cuts to the wealthiest taxpayers. These sort of political oxymorons are also present in Michigan Republican's top legislative priorities -- "religious freedom" which allows for state sanctioned discrimination and "insurance reform" which ends the nation's best catastrophic coverage. After all, these are both ideas that benefit big Republican donors at the expense of the poor and disenfranchised.
Based on this history, it comes as no surprise that after completely dropping the ball on properly funding Michigan's infrastructure, the answer to finding the extra money again means a tax hike for the poorest residents. Given how much Republicans claim to hate tax increases, continually upping the ante for the working poor seems to run counter to the party platform; but if you just call this increased tax burden "broadening the base", it suddenly becomes politically palatable. Because the Republican narrative suggests that the rich -- "the makers" -- already pay too much. Therefore any new funds should come from the poor -- "the takers."
So rather than ask wealthy Michigan residents to give back some of the income tax cuts they received under Rick Snyder, Republicans are looking at cutting the Earned Income Tax Credit (EITC) for a second time in four years. The problem is, the basis for this tax increase -- fair taxes -- is another big lie.
While giving Michigan's working poor a tax credit does mean a slightly graduated tax rate, income is hardly the only tax that Michigan residents pay. The reality is that when you take in to account the total tax burden, the top 20 percent of Michiganders pay less in taxes than anyone else. In fact, in Michigan the people that earn over $392,000 in taxable income only pay 5.1 percent of their income in taxes while the tax rate for those making between $17,000 and $34,000 per year is nearly twice as much, at 9.4 percent.
In terms of the state budget, if the legislature could simply get the top 1 percent to pay the same percentage of their income in taxes as the working poor, Michigan would receive an influx of nearly $650 million per year in extra revenue. Additionally, if the next 19 percent of Michigan tax payers increased their contributions to the 9.4 percent of income those in the lower income brackets pay, it would generate another $2.3 billion in revenue for the state. Just to be clear, this means if Michigan's tax code was truly fair and treated all citizens the same the state would bring in around $3 billion more per year.
Michigan could have the nicest roads and bridges in the nation if GOP legislators would just admit that the tax code currently favors the wealthy in a big way instead of continuing to perpetuate the lie that the rich are taxed too much.
Of course the stupidity of this EITC legislation goes beyond this politically motivated falsehood. Data show that the EITC is one of the governments best tools for pulling people up out of poverty, with a return of $1.67 for every dollar spent. This math is why Gerald Ford enacted the EITC in the first place and why Ronald Reagan said this credit as part of a tax overhaul was "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress".
In a country that places such a high value on capitalism, having politicians who reject a 67 percent return on revenue is astounding.
Republicans in the Michigan legislature have offered up a litany of really dumb legislation over the past few years, but there is perhaps nothing more disheartening then seeing a group of wealthy legislators decide that raising taxes on the people who are already saddled with the highest tax burden in the state in order to keep taxes low on the people who already experience the lowest tax burden, all while costing the state a high return on its investment, is an example of "shared sacrifice".
The good news is, only 27 percent of voters have a positive view of the job the legislature is doing and that was before the embarrassment that was Proposal 1. If this legislature insists on raising taxes again on the working poor, they should be prepared to experience some of that "shared sacrifice" they like so much come November 2016.
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