Column: Grover and Me
Editor’s note: Though The Chronicle focuses coverage on local government and civic affairs in the Ann Arbor area, from time to time we acknowledge that a world exists beyond these borders. For one, we pay state and federal taxes – and in Michigan, as Ann Arbor resident Roger Kerson notes, many of us are now paying more.
Many Michigan residents will be paying higher taxes this year, thanks to tax hikes championed by Gov. Rick Snyder.
According to Daily Beast correspondent Howard Kurtz – a venerable Washington insider who is supposed to know such things – the greatest fear among certain Republicans in Congress is not that they might stumble during the current game of fiscal chicken and send the nation into default.
They are more worried, writes Kurtz, of being “targeted for defeat by anti-tax crusader Grover Norquist.” Which is what they dread will happen if they agree to anything that would provide the federal government with a single penny of additional revenue.
This leads me to wonder: Has anyone inside the Beltway taken a look at the tax increases Norquist signed off on here in Michigan?
Norquist, who has famously declared that his long-term goal is to shrink government “down to the size where we can drown it in the bathtub,” runs an outfit called Americans for Tax Reform. Never at a loss for a sound bite, he has gained outsized media attention with a demand that candidates for state and federal office sign an anti-tax pledge. The state version calls on candidates (and incumbents) “to oppose and vote against any and all efforts to increase taxes.”
The wrath of Grover, apparently, was not sufficient to intimidate Michigan Governor Rick Snyder or GOP majorities in the state House (63-47) and state Senate (26-12). They passed a budget this spring, ahead of schedule, and they balanced it the old-fashioned way: They raised our taxes.
State tax hikes will cost me and my family, I figure, about $1,500 a year. As a whole, individual Michigan taxpayers will pay $1.42 billion in new taxes, including a substantial bump in the Michigan income tax rate – which was supposed to fall to 3.9% over the next few years – to a higher, permanent level of 4.25%. There’s also a tax on a whole new category of income – pensions – which used to be exempt from state taxation.
Increased tax rates and new categories of taxation usually get ol’ Grover pretty red in the face, so I gave his office a call to see if he was planning to stage a recall campaign against Snyder, or to run primary candidates against offending legislators. Or maybe have some people shot at sunrise, which is the sort of thing he likes to say. (No wonder he gets on TV all the time.)
Apparently, Norquist was too busy torpedoing federal budget talks to spend any time with me. I was handed off to a press aide named John Kartch, who declined to return my calls or emails.
To be fair, if I were Kartch, flakking for a red-meat right-wing lobbying shop, I wouldn’t call me back either, given the type of people I usually hang around with.
To be even more fair, I didn’t need an interview with Kartch or Norquist to find out if they felt my pain last month, when the first installment on my higher state tax bill was due. (I’m self-employed, so I have the joy of writing checks to Uncle Sam and Uncle Rick four times a year, instead of just once.) Americans for Tax Reform issued a press release in April, when the Michigan House passed an early version of the tax hikes (different in degree, but not in kind, from the final measure.) Norquist didn’t attack the idea – he endorsed it.
Snyder, a former hi-tech executive who lives in Ann Arbor and ran for office as “one tough nerd,” is much more inclined to get tough on wage-earning Joes and Janes than with his former – and future – peers in the business community. While you and I are shouldering an additional $1.42 billion in tax hikes, Michigan businesses will get $1.64 billion in tax cuts. Some 95,000 businesses in Michigan will not have to pay any taxes at all.
Since the total tax increases you and I will pay are outweighed by lower taxes for businesses, state government winds up with less money – about $224 million a year less by 2013. That’s four tenths of one percent of the total state budget, which weighs in this year at $47 billion. I’m not sure this qualifies as drowning government “in the bathtub”; it sounds more to me like “throwing a little water up government’s nose.” But it was good enough for Grover. In his April 28 press statement, he ordained the Michigan tax package as a “net tax cut, it is consistent with the pledge.”
Even better, it will “help to end Michigan’s lost decade of high unemployment … lower the barrier for employers to start-up, expand and invest, inevitably creating more jobs across Michigan.”
We should check back in a few years to see how the “inevitably” thing is working out. I liked Republicans better back when, like Richard Nixon, they were all Keynesians. So I have a hard time figuring out how any jobs will be created when millions of families lose disposable income through higher taxes, just to provide tax breaks to a much smaller number of businesses. (If we were investing the added revenue in public infrastructure to enable private profits, like roads, schools and bridges, it would be a different story.) To whom are Michigan businesses going to sell their goods and services, when me and everybody else in the state has to fork over all our extra cash to Rick Snyder?
The pretzel logic asserting that my tax increase isn’t really an increase because somebody else is getting a bigger tax cut is easily exposed: If I tell the Michigan Department of Treasury I don’t intend to pay the $1,500 the new law says I owe because “Grover Norquist told me I was getting a net tax cut,” I’m pretty sure things won’t turn out very well for me.
Things won’t turn out very well for any of us if the entire country continues to be held hostage by a single Beltway operative with a big Rolodex and an oversized obsession about the size of his tax bill. Even right-wingers used to understand this, as the left-wingers over at TalkingPointsMemo.com have demonstrated, with graphs showing that both Ronald Reagan and Maggie Thatcher addressed budget deficits by raising taxes while in office.
But you don’t have to go back to the 1970s or 1980s to find a conservative icon who supported a tax increase. You just have to go a little bit west, and pay us a visit here in flyover country. Rick Snyder raised taxes and not only lived to tell about it – he even got a pat on the back from America’s angriest anti-tax ayatollah.
Me? I couldn’t even get a return phone call. Thanks a lot, Grover.
Roger Kerson, creative director at RK Communications, is a media strategist for labor unions, environmental organizations, and green businesses.
Thanks for the numbers, Roger. It confirms what I suspected, but I didn’t have the data. Here’s an article I’d like to see: I’d like to know how much a hypothetical small business–a small store on Main St., for instance–pays in taxes (all kinds). They’re always complaining that they’re in an unfair tax environment, paying more than both individuals and large corporations. What do they mean? What are all the ways that they are taxed that are so onerous?
I, for one, am happy to pay more in taxes. Our tax burden, as a percentage of our income, has declined substantially over the years yet we demand the same services. We complain about police being cut as we buy another big-screen. I also don’t mind the business taxes being cut. You have to dig into the details to get a full understanding of what Governor Snyder is trying to do in the big picture.
The Citizens Research Council of Michigan provides a detailed briefing memo on the state’s FY2012 budget: [link to .pdf file]
One of their conclusions: “Although difficult to quantify, reduced business taxation on its own is likely to yield positive economic growth; however, this will be offset, at least in part, by the negative economic growth that accompany higher income taxes through reductions in disposable income. Any net effect, positive or negative, is likely to be small.”
I don’t mind paying higher state taxes as long as the money stays in Michigan and doesn’t get sent out of state or overseas in the form of jobs, increased profits or corporate jets and vacation homes by the companies and their CEO’s that get the tax breaks.
I doubt that Snyder cares about that as long as they get the tax breaks. FYI, The Bush tax cuts for the wealthiest 2%, or as Norquist and other refer to them, the “job creators” generated the fewest jobs under any president in recent history including Clinton under whom taxes were higher.
So much for tax breaks for the wealthiest in this nation creating jobs.
@2. Is Snyder trying to do anything different from other modern-day Republicans? He believes (and I’ll give him the benefit of the doubt and credit him with actually believing it) that if we only allow the wealthy to become wealthy enough, they will begin to give some of it back in the form of jobs. This is his big picture, right? Or am I missing something?
An why would busy man like Norquist waste two seconds on a nickel & dime professional lefty like you? Smart move on his part I’d say.
@Marvins Face
You can send in extra cash to the treasury if you like. Please do in fact.
Rats! And here I was, thinking I was so irresistible to Mr. Norquist…
@Marvin, I don’t mind paying higher taxes either, but I think we disagree about how the money should be used. The evidence that lower taxes on businesses stimulates job creation is pretty weak. Things like access to markets, reliable infrastructure, access to a trained workforce tend to make more difference in business location decisions than the absolute tax rate — and for the last two, you need a healthy tax base to make them happen.
@Sally: I don’t know what Rick Snyder believes. But if he’s as data-driven as he claims, he’d be a lot more skeptical of the trickle-down theory which certainly appears, as you say, to drive his big picture theory.
@Just Ken: We agree: I don’t blame Grover or his staff for declining to take my calls. I do think, however, they are thoroughly culpable for holding the entire global economy hostage to enforce a rigid view of economic policy that benefits the few at the expense of the many.
I suppose everyone has moved on from this, but I went back and looked up what small businesses were paying in taxes before Snyder’s changes. I see that beginning in 2008 (under Granholm), businesses making less than 350,000 in gross receipts a year don’t have to file a Michigan tax return or pay tax at all. So that should knock the last leg out of any argument that Snyder is trying to help your struggling Mom and Pop shops. They already had their tax relief.