As it now stands, seven out of our fifty states do not apply income taxes to their residents. That number might jump up to eight if Republican politicians in the Michigan senate get their wishes.
Last week, conservative Michiganders started circulating proposals to reduce Michigan’s income tax, which currently stands at 4.25%. They claim that repealing the tax will attract more businesses to the state, and encourage private citizens to move there.
According to State Senator Jack Brandenburg, “Michigan is still a tough place to do business and I think the more jobs you create, it sends off a more positive image of our state. It’s simple, the more jobs you create, teh more people spend. The more people spend, the more jobs are created and there is more tax revenue for our state.”
“This is the people’s money, not ours,” says House Speaker Tom Leonard in support of the proposed bill. “Michigan has turned a corner, our economy is booming, and there is even a budget surplus. I’m excited to join my colleagues, offer the best way forward, undo the mistakes of the past and return hundreds of millions of dollars back to the people who earned them in the first place.”
If it becomes law, the House measure would reduce the income tax rate to 3.9% through 2018. It would then prune it by 0.1% each subsequent year, with the goal of eliminating it completely in forty years.
Many other state legislatures have rattled their sabers at their states’ respective income taxes, unsuccessfully. Bobby Jindal tried to introduce a plan to reduce state income and corporate taxes in Louisiana, commensurate with a hike in sales taxes, that was defeated.
Arizona, Ohio and Wisconsin have also made noises recently about slashing their income taxes.
The notion meets with criticism from many corners. Opponents argue that reducing or eliminating state income taxes cuts the budgets for projects that are in the public interest, like building roads and funding public schools. And when sales taxes increase to take up the slack, it significantly diminishes the buying power and quality of life of the poor.
Jack Lessenberry, a radio personality on Michigan Radio, says, “Taxes are one of the few things we’ve been told are socially acceptable to hate. Except that the idea that we could or should completely eliminate the income tax is not only nonsense, it is dangerous nonsense,”
“The state would literally not be able to function if the income tax were eliminated, and any major income tax cuts would make things worse for the majority of our citizens.”