Via Wiki­media Commons

The day after the Michigan Senate passed a $1.8 billion cor­porate welfare bill, the Michigan House voted against cutting the state income tax — by less than one-half percent.

Repub­licans control the Michigan House and Senate by wide margins and have the gov­er­norship, but when given the oppor­tunity to help indi­viduals or wealthy cor­po­ra­tions, they chose the latter.

Gov­ernor Rick Snyder opposed the income tax cut and urged law­makers to vote against it.  He claimed tax cuts were too quick, which he said could cause short­falls in the state budget. But these excuses, which Snyder and other Repub­lican law­makers pre­sented, should not console fiscal con­ser­v­a­tives.

Under the bill which failed in the House, the state income tax would have dropped a meager 0.1 percent in 2018, from its current rate of 4.25 percent to 4.15 percent. Through 2021, it would have fallen to 3.9 percent. This small cut prompted Rep­re­sen­tative Dave Pagel to call the measure “fis­cally irre­spon­sible.”

Pagel belonged to a group of 12 Repub­licans who helped defeat the tax cut.

The plan would have saved tax­payers $1.1 billion per year, but Snyder said this was a burden the state could not bear. And Repub­licans claimed Michigan couldn’t lose this revenue without cutting essential ser­vices.

But Michigan sur­vived before with lower taxes. The income tax was 3.9 percent until 2007, and it did not exist at all before 1967.

Despite such prin­cipled bud­getary con­cerns from Michigan Repub­licans, they still find mil­lions of dollars to give to cor­po­ra­tions every year.

The Senate’s latest cor­porate welfare leg­is­lation would give $1.8 billion to busi­nesses over the next 20 years. It passed with the votes of 20 out of 27 Repub­lican Sen­ators and the support of State Senator Mike Shirkey, who rep­re­sents Hillsdale.

The bill still has to pass the house and receive Snyder’s approval. But even if this bill is defeated in the House, it is only one of many cor­porate welfare pro­grams that Michigan still has, such as the Michigan Eco­nomic Devel­opment Cor­po­ration, which redis­tributes nearly $200 million from tax­payers to big busi­nesses each year.

The problem with these pro­grams — besides that they unfairly treat tax­payers and misuse the state budget — is that they allow political power to influence business deci­sions.

In Hillsdale, for example, the Com­mercial Reha­bil­i­tation Act gave tax breaks to the owners of the Hillsdale Market House but not to Handmade when they opened their business. This is because politi­cians get to decide who receives the tax breaks and who does not — and Handmade did not lie in the right place to receive the government’s assis­tance, according to Hillsdale Assessor Kim­berly Thomas.

But these cor­porate sub­sidies don’t just pick winners and losers — they hurt com­mu­nities. Broad Street Market, which had received tax breaks, went out of business, leaving the city with another empty building and many people out of a job. Tax­payers were on the hook to build up the business, but they didn’t get any money back when it went out of business.

Most Repub­licans cam­paigned on tax cuts and fiscal con­ser­vatism, but have only delivered tax hikes and sub­sidies for busi­nesses.

Michigan Repub­licans should show that they can govern like fiscal con­ser­v­a­tives by elim­i­nating the state’s cor­porate welfare pro­grams and using the money saved to give cit­izens a tax break.

  • Tyler Groe­nendal

    Well said. Cor­porate welfare is both incredibly inef­fective and harms the city, the res­i­dents, and the tax­payers of Hillsdale.

  • disqus_odKVC5cL1k

    Per­spective, the 1.8B over 20 years vs 1.1B per year for 0.1%. Sure Giving back the 0.008% would be better, but would anyone notice an extra 0.008%. The state needs jobs, 0.008% isn’t going to change anyones sit­u­ation mean­ing­fully.

  • Rogue A.I.

    Repub­licans love welfare for wealthy cor­po­ra­tions but hate it for poor people.

  • Jen­nifer Melfi

    be careful Josh, they (the school for­merly known as Hillsdale College) have been known to throw people out of school for spouting sac­rilege like this.