Susan J. Demas: What’s not in the GOP budget? Start with pension tax repeal, working-class tax cut.

September 27, 2019 4:25 am


Remember GOP former Gov. Rick Snyder’s so-called pension tax, which passed under the GOP-led Legislature in 2011? After the outcry, even some Republicans decided they hated it and many who voted for the tax have been term-limited by now.

Gov. Gretchen Whitmer proposed killing said tax in her Fiscal Year 2020 budget plan, which you might expect to garner some bipartisan support. But it didn’t make the cut in the GOP-controlled Legislature’s final budgets passed over the last week, the Department of Technology, Management and Budget confirmed, even though there had been some bipartisan action on it.

Whitmer’s proposal to increase the state Earned Income Tax Credit (EITC) for low-income people from 6% to 12% of the federal credit also wasn’t part of Republicans’ budget plans. This was slashed from 20% under Snyder, again in 2011 as part of his corporate tax cut.

Those measures were, in part, proposed to offset for vulnerable people Whitmer’s 45-cent gas tax hike to raise $2.5 billion annually for roads, which also wasn’t part of the GOP’s budgets. Republican leaders instead scraped together $400 million in one-time funding — less than one-sixth of what’s need every year for roads, according to myriad experts. More on that in a minute.

House makes 1st stab at killing pension tax

A popular GOP talking point this year has been that the Legislature shouldn’t address taxes along with spending (which is, well, weird, since they’re both part of the same balance sheet).

Gov. Rick Snyder, (R-MI), speaks during a House Oversight and Government Reform Committee hearing, about the Flint, Michigan water crisis, on Capitol Hill March 17, 2016 in Washington, DC. |
Mark Wilson, Getty Images

But the last governor, Snyder, also presented tax and budget plans together in his inaugural budget recommendations in February 2011. There seemed to be considerably less consternation from Republicans back then, especially as Snyder was proposing a roughly $2 billion annual corporate tax cut.

The Legislature is, of course, free to take up tax proposals independent of the budget, so we’ll see if GOP leaders are serious about getting rid of the pension tax. They’ve shown zero interest in boosting the EITC, however, although six states have raised it this year, including neighboring, GOP-controlled Ohio.

In addition to Whitmer’s proposal, Democrats have proposed a number of ideas to help working-class families, which have failed to gain traction, including:

  • State Sen. Jeff Irwin (D-Ann Arbor) has legislation increasing the EITC to 30%.
  • State Rep. Angela Witwer (D-Delta Twp.) introduced a bill hiking the rate to 20%.
  • State Rep. Laurie Pohutsky (D-Livonia) has sponsored legislation expanding the EITC to workers ages 18-24 without kids.

After the 2016 election, there was no shortage of punditry that voters flipped to now-President Donald Trump due to “economic anxiety.” It’s weird that Republicans in Michigan don’t seem to be doing anything to alleviate that anxiety, like hiking the EITC.

6 states have hiked a tax credit for the working class  — but not Michigan

After all, it targets that coveted working-class demo, as you only qualify for the EITC, for example, if you make less than $15,270 if single with no kids, $49,194 if you’re single with three or more kids or $54,884 if you have a family with three or more kids.

I’m starting to get the feeling that between this, the 2017 federal tax cut that only helped the rich and doing nothing to help striking General Motors workers that Republicans may not really be on the side of working people, after all.

If you haven’t had time to read every page of the budget (don’t worry, many lawmakers haven’t, either), you may be scratching your head about how Republicans cobbled together that much-ballyhooed $400 million in extra road funding this year (not to be confused with a long-term solution).

Final GOP budgets pass Legislature, Whitmer calls bills ‘a mess’

Dave Eggert of the Associated Press has a detailed breakdown of what got cut. That includes the Department of Corrections, which may lead to 75 layoffs. The state’s 15 public universities and 28 community colleges received below-inflationary increases, which higher education officials said will result in students having to take out more loans.

In case you’re wondering, the technical term for this is robbing Peter to pay Paul in order to try and look good for the 2020 election. And don’t worry. Because it’s a GOP Legislature, pundits will solemnly agree it’s fiscally responsible, because that’s the way it works, kids.

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Susan J. Demas

Susan J. Demas is a 22-year journalism veteran and one of the state’s foremost experts on Michigan politics, appearing on MSNBC, CNN, NPR and WKAR-TV’s “Off the Record.” In addition to serving as Editor-in-Chief, she is the Advance’s chief columnist, writing on women, LGBTQ+ people, the state budget, the economy and more.