Snyder proposes massive shift in tax burden

Gov. Snyder’s budget proposal would represent a major shift in the tax burden in the state of Michigan, significantly reducing the taxes paid by businesses and replacing the revenue by a huge tax increase on seniors, the poor and the working class.

The Michigan League for Human Services has done the math:

League Senior Policy Analyst Joanne Bump has found that businesses will realize more than an 80 percent decrease in taxes. Not a 10 percent cut, not 20 percent or even half – a full 82 percent drop…

The Michigan Business Tax now generates $2.1 billion in revenue to help pay for vital services such as education, help for abused kids, and public safety. That will plummet to $392 million in FY 2013, the first full year of the tax changes. House Fiscal Agency Director Mitch Bean this week used a different base to compute an even bigger drop — 86 percent.

At the same time, personal income taxes will climb a whopping 31 percent. That will not be shared equally. In fact those at the high end of the economic ladder will see the biggest gain as the income tax rate shrinks from 4.35 percent to 4.25 percent.

Here’s who is expected to pick up the slack: low- and moderate-income households and families who would lose the Michigan Earned Income Tax Credit, seniors who will lose part of the homestead property tax credit and will have to pay taxes on pensions, and parents who will lose the $600 per child state income tax deduction.

And yet despite this huge shift in tax burden, there will still be more than a billion dollars in cuts to social services, education, local revenue sharing and virtually every other area of the state budget.