From a mailing I received from my state representative last week:
STATE PROPOSAL 14-1
APPROVAL OR DISAPPROVAL OF AMENDATORY ACT TO REDUCE STATE USE TAX
AND REPLACE WITH A LOCAL COMMUNITY STABILIZATION SHARE TO MODERNIZE
THE TAX SYSTEM TO HELP SMALL BUSINESSES GROW AND CREATE JOBS
So what is this really?
I'm represented by state Rep. Sarah Roberts, a Democrat. I'm generally satisfied with her and will likely vote for her again. But this mailing came with just the legal language of the proposal and no explanation of what it all means. Just reading what was provided, I don't think many people would come away with any understanding of what this proposal does.
Sadly, just about everything that comes out of Lansing is crafted by the GOP these days. Democrats like Roberts don't get much say. So, I tend to be skeptical of all measures from the Legislature, particularly those supported by the business community. (Despite the fact that I'm a small business person myself.)
So, what is Proposal 1? And what does it do? Follow me beyond the squiggle for what I've found out.
Here's the legalspeak:
The amendatory act adopted by the Legislature would:
1. Reduce the state use tax and replace with a local community stabilization share of the tax for the purpose of modernizing the tax system to help small businesses grow and create jobs in Michigan.
2. Require Local Community Stabilization Authority to provide revenue to local governments dedicated for local purposes, including police safety, fire protection, and ambulance emergency services.
3. Increase portion of state use tax dedicated for aid to local school districts.
4. Prohibit Authority from increasing taxes.
5. Prohibit total use tax rate from exceeding existing constitutional 6% limitation.
Should this law be approved?
YES [ ] NO [ ]
I came away from this with a number of questions:
1. What is the "state use tax"? If you aren't doing the accounting for a manufacturing or retail business, you probably have no idea. I didn't.
2. Point 2 talks about requiring a "Local Community Stabilization Authority" to provide replacement revenue. Where does the LCSA get its money? What is the LCSA? Who makes up the LCSA?
3. Point 3 says we are increasing the portion of the state use tax dedicated to schools. But the main point here was reducing the state use tax. So, does that mean more or less money for schools? How can we tell without any numbers?
4. Point 4 says the LCSA can't raise taxes. Um... would they have been able to do that anyway? In a state where any increase in taxes is required to go to a popular vote according to the state constitution?
5. Prohibit total use tax rate from exceeding the existing constitutional 6% limitation. Why do we need to pass a law about this if it's already in the constitution?
I found out the answer to question one. The state use tax is on business's property (not land, but machinery and such) that is paid directly to local communities. A lot of communities would like to get rid of it because it's a pain to administer -- particularly in communities where staff has been reduced by poor revenues since the real estate crash.
That's one point in favor of Proposal 1. I don't have any desire to inflict extra red tape and accounting on already burdened city and township administrations.
However, I don't particularly see a need for more tax breaks for businesses. I would be in favor of shifting the administration of the use tax to the state, not eliminating it or necessarily reducing it. We have already given Michigan businesses tax breaks, at the expense of individual taxpayers -- particularly seniors who now have their pensions taxed under Gov. Rick Snyder's reverse Robin Hood tax revamp.
I don't really see another tax break resulting in some great explosion of new jobs.
Raising the minimum wage would do more to help small businesses. (I think most people these days are familiar with the truth that raising demand does more to create jobs than reducing business taxes. Raising the minimum wage would give our most cash-strapped working people more money to spend, thus raising demand for goods and servies.)
I'm still not clear on what the Local Community Stabilization Authority is, but I did find out that the money comes from the state general fund. So, that means more austerity overall.
Point 3 is still sort of murky. Supposedly, all the money to schools would be made up and it would be school aid neutral. However, I don't see any guarantee of that and I'd rather see a real increase than fake neutrality. This could be used as just one more way to starve the public schools.
Points 4 and 5 look like nonsense to me.
So, the bottom line for me is: Vote "No" on Proposal 1.
Unless, of course, someone out there actually understands this measure and can explain to me why it's good.