Not a pie-in-the-sky idea

Added March 5th, 2014 by Gilda Z. Jacobs | Email This Entry Email This Entry
Gilda Z. Jacobs
From the League’s First Tuesday newsletter
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  • Life is a bowl of cherries.
  • It’s the pits.
  • That’s a pie-in-the sky idea.

My staff and I have been making a lot of cherry puns over the last week. But it’s all for a serious reason.

We used a cherry pie to show what 20% of Michigan families earning the least would get if we roll back the Michigan personal income tax from 4.25% to 3.9%. Yep, that’s just $12 – enough to buy a cherry pie from the bakery.

For those right in the middle, it would be $88 (that’s about $1.70 a week). What will that get you? Perhaps a used dough mixer.

But the top 1% — who would get a full 17% of the benefits from a rollback — would receive, on average, $2,618. That will buy you a trip for two to Paris, where you can see all the sights and enjoy French pastry at a café.

Along with a bite-sized analysis, the League sent a slice of cherry pie to each lawmaker to serve up an important message: An income tax rollback is a sweet deal for those at the very top but the pits for the rest as it would take away the best opportunity in a decade to reinvest in education, safe communities, roads and the other engines of our economy that were neglected as Michigan struggled with a long economic downturn.

The League is fortunate to have access to an analysis using a sophisticated tax model created by the Washington, D.C.-based Institute on Taxation and Economic Policy.

That allows us to show the potential impact in a very tangible way. And what it clearly reveals is that the proposed income tax rollback plans are bad for Michigan.

Gov. Rick Snyder’s plan to instead pump up the Homestead Property Tax Credit is a far better alternative and will especially help seniors and those with disabilities. Even better, would be to include an increase in the Earned Income Tax Credit for low-income working families or to forgo the tax reductions and instead use the resources to invest in education that has been so severely cut since the Great Recession began.

In fact, a new poll of 600 Michigan residents shows that most agree. They prefer paying for education or road repair over an income tax cut.

Another study by the Economic Policy Institute examines who has benefited from the post-recession recovery. From 2007 to 2009, more than 90% of the economic growth has gone to the top 1% in Michigan, further deepening income inequality.

Those at the top have benefited the most from the economic recovery, and they will benefit the most from the tax rollback.

Please tell your lawmakers to vote NO on rolling back the income tax.

It’s a far sweeter deal to invest in education and other services that will rev up our economy or directly target tax reductions to those who continue to struggle with low wages.

Those would truly be plans deserving of a cherry on the top.

— Gilda Z. Jacobs
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One Response to “Not a pie-in-the-sky idea”

  1. […] Gilda Jacobs of the Michigan League for Public Policy argued that Gov. Rick Snyder’s plan to expand the state‘s property tax circuit breaker, called the Homestead Property Tax Credit, is a far better way to help low-income working families and seniors than an income tax rollback. She added that an increase in the state’s EITC would provide additional needed support to these same families and individuals. (Michigan League for Public Policy) […]

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