Michigan Republican gubernatorial candidate Rick Snyder is proposing to eliminate the Michigan Business Tax and replace it with a "6 percent flat corporate income tax." Snyder estimates that the flat tax "would raise an estimated $700 million, less than the $2.2 billion the Michigan Business Tax is estimated to generate for the 2009-10 fiscal year," and calls this additional shortfall in a state that already faces an annual problem of severe revenue shortfalls a "$1.5 billion tax cut on Michigan job creators."
It really frustrates me that Republicans seem to own the issue of fiscal reform, even when, as during the Bush years, that reform is deeply irresponsible and goes against their own dogma (as in running a huge deficit). I think there's a big opportunity for Democrats to try and turn that around, and the Michigan Business Tax is a great example of a potential way to do so.
I'd love to see a Democratic candidate stand up in a debate and say something like this:
"My opponent criticizes the Michigan Business Tax, and he's right. It's a bad tax. It hurts small businesses that are critical to Michigan's economy, especially when big businesses like Chrysler and GM—whose lobbyists created this tax and are the only businesses who benefit from it—continue to demonstrate that we cannot rely on them alone to drive economic recovery in this state. The Michigan Business Tax is even worse than the Single Business Tax it replaced, and that's unforgivable.
"Republicans like to criticize the Democratic Party as the party of tax-and-spend. They say that our state can't afford huge increases in spending in our economy, and that's exactly right. But it's become clear that Republicans seem to think that government can spend without taxing, that we can cut our way to prosperity, and the results of that policy have been clear and disastrous. When you campaign on eliminating taxes and nothing else, you end up eliminating taxes like the Single Business Tax and replacing them with worse ones like the Michigan Business Tax. If your campaign is based on eliminating taxes and nothing else, this is great because then your next campaign just argues that we should eliminate the Michigan Business Tax. This may be a great campaign, but you end up hurting people. You hurt the children whose schools lose funding, you hurt your neighbors who lose police and fire protection when state revenue sharing is eliminated, and what's worse is that you end up paying more for less. This is nothing short of a disaster, and it's the result of short-sighted and frankly stupid tax reform that ends up costing businesses and the rest of us more than we were paying in the first place.
So lets agree where we agree. Let's fix the tax system, because it's broken. But let's do it the right way, with a plan. [outline plan, very briefly.] This isn't about taxing just so that we can increase spending. No one gets a blank check. But let's do what the state needs to do, and let's make sure it's paid for. That's fiscal responsibility. That's fiscal conservativism. And that's my stand."
Cue a swelling inspirational soundtrack, and I might be able to sell a few tickets to moviegoers who flocked to Dave and The American President, but I'm not holding my breath to see it in real life anytime soon.