Michigan Votes Forum

Introduced in the Senate on January 27, 2009

The vote was 23 in favor, 14 opposed and 0 not voting

(Senate Roll Call 54 at Senate Journal 0)

Click here to view bill details.

Senator Jacobs’ statement is as follows:

What this amendment does is it takes out the cap that we are putting on the officers’ compensation from where it was previously at $115,000 and taking it to $210,000. I am, however, in favor of the entrepreneurial credit and that is why I am only adding this amendment to take care of that.

I really thought long and hard about whether or not to offer this amendment, but the urgent mission for all of us here is to create jobs and to try to get our economy back on track. I haven’t been convinced that by raising this threshold that we are actually able to do that with this very substantial change. Now I know that a lot of arguments are made about how we have to stand up for small businesses, and that by doing this, we are going to be able to infuse more money that will be used for more jobs. I just haven’t been able to make that connection yet to put my arms around that.

I am a huge fan of standing up for and supporting small businesses in my district, but I really want to take a closer look at what that $210,000 salary really represents. That is over $60,000 more than the average CEO salary here in Michigan according to the Bureau of Labor Statistics. It is more than four times the annual average wage for police officers and five times what our firefighters make in this state. It is a salary that is enough to put four teachers to work in our schools or pay four nurses to staff our hospitals and help our sick. And, it is ten times what those living in poverty make.

I still think $180,000 compensation is something that probably all of us could live on. In fact, I know that there is an effort to reduce our salaries, which are at $80,000, down ten percent. So all of us who think that that is a good idea for ourselves may also want to take some of that thinking in terms of how we view officers’ compensation.

So I want to make sure that if we make job creation our priority at this time, we really also have to focus on those who are the poor citizens, and make sure that they don’t fall further into poverty while we seek a solution for all of Michigan’s needs. It is not that I am unhappy or don’t want to consider giving more money back to higher wage earners, but right now, this is not the right policy for our state. This will leave another gaping hole in our state budget at a time when we are already making drastic cuts just to keep us afloat. So let’s stand up for struggling families, individuals, and struggling businesses and communities. But let’s not take any more away from an already-depleted, critical state budget, and acknowledge that the threshold that it is currently at is a great living wage.

Senator Switalski’s statement is as follows:

Just a minute ago, I was praising my colleagues on the other side of the aisle earlier today and I meant what I said. But only a friend will tell you when you are making a mistake. My friend, the good chair of tax policy, is a very dear friend who I hold in the highest esteem, and I very much appreciate that she changed this bill from $250 million down to $50 million. I thank her for that. I also agree with her on the film credits, and I said so on several occasions.

But that brings us to Senate Bill No. 69 and its $50 million cost. I have to ask who will benefit from this cut. Current law allows credits if the owners, officers, or CEOs in the corporation earn $180,000 or less. This bill would have us believe that people are hurting out there, and they can’t make it on $180,000. So Senate Bill No. 69 raises their compensation limit to $210,000 so that they can keep bread on the table.

Now people trying to keep their businesses open don’t usually do that by giving themselves a $70,000 raise. I don’t really mind people making almost a quarter-million dollars, but I don’t think we need to give them a tax break. As has been said, what about the people who are unemployed? This bill actually reduces the number of new jobs a business must create in order to qualify for this tax credit, from 20 down to 8. It lowers the capital investment from $1.25 million to $500 billion.

Is our goal to increase employment or increase eligibility for tax cuts? This bill changes the base from the credit and the value of the new jobs created to the value of the tax. We have reduced the incentive to create new jobs. So please join me in opposing these bills.

Senator Cherry’s statement is as follows:

I voted “no” on Senate Bill No. 69 because it’s very clear to me that without the Jacobs amendment, this bill raises compensation for CEOs. When we passed the Michigan business tax we already increased the compensation for CEOs in that, and this raises it within a year, again, another $20,000.

I don’t believe this is the time to be doing that. I don’t believe that a business is going to go out of business if we don’t raise this credit another $20,000. I believe that it is the wrong time to be sending a message that CEOs should be paid more.

Senator Cassis’ first statement is as follows:

I am really perplexed. The good vice chair of Finance is asking that this bill be gutted—absolutely gutted. Let’s take away any help for the real job providers in our state. The very ones whom she is talking about, whose families are in distress over either having lost a job or on the brink of perhaps losing a job.

I just don’t think there is any place in this great hall, this Senate Chamber, to be advocating pure class warfare and that is what I heard. In eliminating the small business credit, one is reminded that the revenues in this state have been falling precipitously. The Governor couldn’t even ignore this when she said, and I quote, “We’ve got a drop in revenues that is breathtaking.” Well, why? Because people are unemployed and businesses are closing their doors all over our communities. They need help, and they need a positive response from all of us who sit here and represent them. Of course, when the film credits were passed without hardly any discussion of the fact that they could have a substantial potential impact on the budget, now $100 million is a consensus figure. I see very few of my colleagues standing up and saying let’s take a look at that $100 million giveaway that could more than be utilized to help a broad base of thousands of small businesses stay afloat.

The arguments don’t hold any water. I wish they did because then I would think it was appropriate to stand up and argue against our small businesses today when they are suffering the way that they are. Not only is it impractical, but it is incredible.

I do wish my comments would be recorded. We need an attempt to bring this bill down, allow it to be phased out, up through $210,000 for compensation of a business person who provides jobs in this state. We did so. In working with Treasury, it will cost approximately $50 million, but just imagine if it saves jobs and keeps some businesses open. Then, perhaps, and I do believe this will happen dynamically, that we will see more revenues in this state instead of what we have been seeing, which is a very dismal future.

Senator Richardville’s statement is as follows:

As the chair of the Banking and Financial Institutions Committee, I would like the members to know that the House of Representatives sent these three bills over yesterday afternoon. After working on them for several months with the chair of the House banking committee, we have an agreement to continue to work on a priority level to get these bills complete.

I think it would be erroneous to bypass that system and take the bills up today.

Senator Cassis’ second statement is as follows:

Senate colleagues, this is not really an issue of office or compensation. It is an issue of when they go over that 180,000 threshold, they then are kicked into the full Michigan business tax. So they lose a slight favorable, helpful lower rate that helps them retain jobs and stay in business. We’re hearing from them and they are saying, “We’re going to have to close our doors, or we’re going to let more people go.”

So the idea is not to in any way deal with the compensation alone. It’s the effect of trying to expand the small business credit, the alternative business tax that is within the Michigan business tax to save jobs—to save jobs.

Senator Gilbert’s statement is as follows:

I followed very closely the debate on Senate Bill No. 69, which provided some tax relief for those who run small businesses. We pass legislation on a regular basis providing tax relief. Think about some of the targeted tax credits we have given to several businesses, the film industries, Hemlock Semiconductor, and recently, for car batteries at a far greater expense than what we have proposed here for small business.

I think those who support those have already accepted the idea that tax relief encourages economic activity and creates more jobs. My question for the other side of the aisle who opposed this is why does this not apply to small business as well? Most economists will tell you that the big driver in jobs in this economy is small business; they create jobs on a regular basis. The problem is this credit is diffused throughout the community. There is no press release that goes along with the creation of one or two jobs in small business.

Another concern was that huge compensation of $180,000. Yet not once have I heard anyone complain about compensation given to those in the film industry, Hemlock Semiconductor, or those who may get some generous compensation through the battery credits. Nobody is concerned about that, but small business, $180,000 that is not a good thing.

And, I would point out another thing—you know, just because we create the level of compensation that will allow this small business tax credit to take affect, we don’t raise one person’s salary. That is up to the market in how their business does. I think the other side should be consistent. I would like them to treat small business in the same way as they treat big business.