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It looks like Rick Snyder, the Republican governor of Michigan whose legislation will give "Emergency Managers" carte blanche over Michigan municipalities in the event of a ‘financial crisis' is lowering taxes on businesses by raising taxes on the poor and working class:
Gov. Rick Snyder (R-MI) has proposed ending his state's Earned Income Tax Credit, cutting a $600 per child tax credit, and reducing credits for seniors, while also cutting funding for school districts by eight to ten percent. At the same time, as the Michigan League for Human Services found, the state's business taxes would be reduced by nearly $2 billion, or 86 percent, under Snyder's plan.
Snyder wants to cut business taxes by 86 percent, lowering revenue from those taxes from $2.1 billion to approximately $293 million - a drop of $1.8 billion, all during a recession that has Michigan, like so many other states, strapped for cash. To close that gap, personal income taxes would go up from $5.75 billion to $7.5 billion - and rates on the lowest earners would go up more than rates on the top 1%:
To see chart: http://blogs.forbes.com/erikkain/2011/03/15/michigan-governor-to-cut-taxes-for-corporations-while-cutting-services-for-the-poor-and-middle-class/
As Pat Garofolo notes, if you are a Michigan resident in the lowest income bracket (bottom 20%) you pay a tax rate of 8.9 percent. If you are in the top one percent, you pay a rate of 5.3 percent. This is a dramatically regressive tax system.
So let's sum up the state of affairs in Michigan under governor Snyder:
If you are a Michigan resident you can vote for whoever you like to run your town or city - this is a democracy after all (at least for the moment, we will make references to democracy in the present tense).
But after Snyder's dramatic cuts in support for local governments and schools, you may find that you don't have the funds to run your city or school district effectively. This may trigger the governor's office which could declare your city in a state of financial crisis. At this point, governor Snyder could, theoretically, appoint the CEO of General Motors or any other qualified private citizen to come into your town and take over everything from the public services, to the distribution of state and federal tax dollars. Meanwhile, this Emergency Manager is likely to come from the upper income bracket, and therefore pay a lower rate of income tax than you are. If he owns or works for a corporation - and I'd say this is very likely - Snyder's tax code will benefit him even more.
I can only echo the words of Thoreau at Unqualified Offerings: this is not conservatism. "This is nothing short of giving a governor the power to appoint local viceroys who rule by decree." And yet, there is no Tea Party protesting at the steps of the Michigan capitol in Lansing, no angry Fox pundits decrying the big government policies of the GOP in Michigan.
Exit question: under Snyder's legislation, is it at all likely that a cottage industry of Municipal Management Consultancies will rise up to offer their services for struggling local governments? This strikes me as a potentially very lucrative business, made all the more so by the fact that Emergency Managers will be exempt from any lawsuits brought against them. Quite quickly, this industry could become an influential lobbying interest in Lansing, entrenching their very secure rents even further. Meanwhile, democracy erodes with each new, manufactured crisis.
Fortunately, Michigan voters will have a chance to kick Snyder and the GOP out of office in a few years. Unfortunately, the Democrats in that state are only arguably the lesser of two evils.
by E.D. Kain
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