Michigan Votes Forum

Introduced in the Senate on March 27, 2008, to phase out over three years the 21.99 percent Michigan Business Tax surcharge imposed on businesses as part of a $1.4 billion tax hike passed in 2007 to avoid government spending reductions. The surtax would be eliminated in 2011

The vote was 26 in favor, 12 opposed and 0 not voting

(Senate Roll Call 595 at Senate Journal 81)

Click here to view bill details.

why wait? Do it now.

It will NEVER happen!

Senator Brater’s statement is as follows: Mr. President and colleagues, this vote that is about to go forth today is a reckless emotion. It is a reckless process. It absolutely mirrors the recklessness of the past eight years in Washington that has led us to this current national fiscal crisis. This is no way to run a Senate floor. This is no way to run a government in the state of Michigan. The policy that we are seeing today is act first; think and analyze later. This bill will cost the Michigan Treasury hundreds of millions of dollars without identifying a source; without a comprehensive plan of how to move Michigan forward. Senate fiscal analysis reveals—if you will only look on your laptops. In 2008-2009, the cost of Senate Bill No. 1242 is $119.5 million; in 2009-2010, the cost is $333.3 million; in 2010-2011, the cost is $555.8 million; in 2011-2012, the cost is $660.2 million. Colleagues, you will recall that this surcharge was added to a budget agreement that was dealing with a budget deficit last year of $1.7 billion. We came to this agreement to include this surcharge as part of that overall budget fix on a bipartisan basis. Now, today, we are moving forward without deliberation, without adequate time to study and take into account the consequences of this action, which is exactly the way we got into this situation to begin with. It is highly an uneducated way to proceed. It is highly irresponsible. Before the Senate Finance Committee, which I served on last session, we heard over and over testimony that said that businesses don’t choose to locate in a state solely because of taxes. In fact, taxes tend to come down fifth on the list. First, among the top five are always schools and education, roads, bridges, and other infrastructure, public safety, parks and recreation, and other quality-of-life issues. You can see that if you want to come see that the results of paying taxes in action, come to my district. Come to Washtenaw County, come to the 18th Senate District, where although we are struggling, our economy is doing better on average than most of the areas around this state. We are not known for being the lowest tax area of the state. So it is important to step back, take a deep breath, do the responsible things, study this situation, and not just jump before we think once again. I know that there are some unforeseen consequences of this surcharge that need to be addressed, but this is not the way to do it, colleagues. I ask for some slowing down of this process.

Senator Switalski’s statement is as follows: I rise in opposition of Senate Bill No. 1242, and I have to ask, where have all my good fiscal conservative friends gone? Where have they gone? This bill is not fiscally responsible. It will return us to the bad old days of structural deficits. We were just there last year. We finally got that behind us. Let’s not go back there. According to the Senate Fiscal Agency, this bill would cost $120 million this first year—this year; $333 million next year; $556 million the year after that, and $660 million in the year of 2012. Over the course of that, that is $1.7 billion, a fifth of our General Fund. Now how would we pay for this? The bill is silent. So let’s review the history of the business taxes because we have gone done this road before. After a long campaign against the SBT, the Legislature cut its rate from about 2.1 percent down to 1.8 percent—1.7 and then voted to eliminate it without defining its replacement. Midway through 2007, we had a great bipartisan agreement on what the replacement was and it was revenue-neutral. A year ago, we agreed on a sales tax on services to restore the business tax to the level it was at in 2000 and eliminated thereby half of our structural deficit problem. Business did not like that service tax, and we agreed to this surcharge with business as preferable to that service tax, and the replacement was revenue-neutral. By passing this phase-out without defining its replacement, we are misleading business into thinking the tax will be gone, but it will have to be replaced. Some businesses may end up paying more than they did under the MBT and the surcharge and will be right back into this same problem. We should agree on how we would deal with the $1.7 billion shortfall before we eliminate the surcharge. Now I heard some suggestions about the film tax and I am sure we are going to have some productive discussions about that film credit, but $150 million is not a replacement for $722 million. So I think we need to either identify the cuts or the replacement revenue, and we should adopt the principle of that we have to pay as we go. So I urge members to vote against this proposal.

Senator Pappageorge’s statement is as follows: Earlier, the speaker from the 19th District talked about recklessness. Let’s remember how we got into this mess. A year ago today, we were facing close to a $1.8 billion shortfall in the things we promised in our budget. Why? Because $900 million was never there to begin with; $150 million was pay raises which we should not have offered, and some $700 million was new programs. If we do not stop budgeting on money we want to have instead of money we do have, this will continue and it has to stop. We have to start being honest with the citizens of Michigan. Honestly, this is all the money we have and at the last minute, as we did a year ago today, we are not going to shut down the government if we don’t get the money we want. The idea that this is costing Michigan misses the point. The point is we are costing our citizens and our businesses too much and we have to stop.

Senator Bishops’ statement is as follows: Again, I don’t want to belabor this point; once again, I think it is straightforward. I think those who are on the floor today know where they are going to fall on this vote, but I just want to make a record of the fact that we are in a very challenging time in our state’s history. It is our responsibility to step up and make sure that we address the issues that we can. This is an opportunity for us to do exactly that. We lead in all those statistics that we don’t want to lead in. We are last in those statistics that we have always strived to be first in. I am not going to be the first to tell you that. I know that you know the challenges that face this state. But the point has got to be made that the present system is not working, and we cannot continue to go day after day doing the same thing over and over again and expecting a different outcome. The future of this state hangs in the balance, and our constituents are waiting for leaders. Now our constituents are both Republicans and Democrats, and I can assure you that despite our obsession with the partisanship, they could really care less, especially on a subject like this on the future of our state. Today really is our opportunity to come together and do something very positive to send a clear message—really, two messages: First and foremost is to the businesses that are in this state who have invested, who have been with us, who have stuck through the hard times, we want you to know that we appreciate you, and we want you to stay and prosper. To those businesses that are considering a new home, we understand the issues that you will consider in making the business decision as to where you will set up your shop and where you want to call home. We are determined to create that environment here in Michigan so that we can compete globally. Your vote today will send those messages. Now I understand your reservations. No questions about it, we have budgetary issues going into the future. This is a bold move, but it is an opportunity for us to come together to address the issue. If you are not satisfied with tax policy across the board, I understand that. I think you won’t get much of a rejection on this side of the aisle. If that is the case, let’s use this as a catalyst to open tax policy as a whole and figure out where we need to be in the 21st century. We need some vision in this state. We need some vision in this chamber. We have to decide how we want to leave this state when our terms end. This is yet another day that we are discussing solutions, and I think this is a great time for us to show bipartisanship on behalf of our state, move in the right direction, and do the right thing. Your state needs your leadership today. We really can’t afford to wait.

How the heck do you think we are going to remain an democrat stronghold by passing tax cut legislation that will creat jobs. Before you know it we'll be a red state. Raise taxes on business you dummys.