Not a pie-in-the-sky idea

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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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EITC is perfect vehicle for the governor

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Gov. Rick Snyder unveils his fourth executive budget Wednesday and worthy of applause is the fact that he has rejected the across-the-board rollback of Michigan’s personal income tax.

The governor indicated in his State of the State address last month that he wants a tax cut but one that is targeted to working families — those “hardworking Michiganders who get up every day and pack their lunch and go to work.”

The good news is that there is a vehicle already in place to deliver exactly what the governor is seeking: the Michigan Earned Income Tax Credit. As a new fact sheet from the League shows, the tax credit is one of Michigan’s most effective tools for supporting working families and reducing poverty.

Using the $100 million the Snyder administration has targeted for tax relief to increase the EITC would help the very workers the governor wants to help, and it would boost the economy. That could lift the EITC from 6% of the federal credit to 11% of the federal credit. For a working mom with four growing boys, like Paula Fekken of Traverse City, that would mean $300 more for car repairs and other necessities to keep her on the job.

A new report by the Center on Budget and Policy Priorities documents the benefits from state EITCs: They keep working parents on the job and children out of poverty.

Unfortunately, the income tax rollback is gathering steam in the Legislature with a Senate hearing. The tax cut fever is driven by higher-than-expected revenues, nearly $1 billion over three years. It’s a strong election-year temptation as GOP lawmakers look to defend their records for the damage done to working families and seniors in the Big Tax Shift of 2011.

Yet, as the League testified at the Senate hearing last month the income tax rollback disproportionately benefits upper-income households and threatens Michigan’s fragile recovery. In fact, $3 of every $5 would go to those in the top 20% of income.

Increasing the EITC or spending the higher-than-expected revenue to begin restoring Great Recession cuts to education and other key services would also be better economy-boosting routes than the across-the-board income tax cuts.

Either choice would help the governor reward hard-working folks in Michigan.

– Gilda Z. Jacobs

Hunger grows at time of thanks

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It’s November and time to look forward to Thanksgiving — a treasured American holiday, symbolized by the bounty of the pilgrim harvest. For my family, that means turkey, stuffing and all the trimmings.

For too many in Michigan, however, Thanksgiving will be a reminder of the ongoing struggle to put enough food on the table.

Nearly one in every seven Michigan households reported difficulty affording food at some point last year. And a plan before Congress, if adopted, will worsen hunger and jeopardize Michigan’s fragile economic recovery as well. (more…)

Detroit’s woes, solutions don’t stop at city limits

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The July 18 bankruptcy filing for Detroit was shocking, though in many ways, it wasn’t a surprise at all. Detroit’s struggles have been evident for years. Still, as a native Detroiter, my heart broke a little that day.

One thing that is clear in this multilayered controversy: Detroit’s problems and solutions do not stop at the city limits. We all have a stake in this — not only in Michigan, but across the country as Detroit may be the canary in the coalmine for other regions.

What should be the response from policymakers? First and foremost, let’s remember that this is about people. Stronger state and federal strategies that invest in children and families, reduce poverty and grow jobs will be good for all. And we have lots of room for improvement. (more…)

Fast track but off course

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Before leaving town for the annual Mackinac Policy Conference and fudge fest last week, state lawmakers finished their work on the FY 2014 state budget, making decisions on the allocation of approximately $48 billion in state and federal revenues at nearly breakneck speed.

So how did low- and moderate-income families and children, the unemployed, seniors and other vulnerable residents of Michigan fare in this fast-track budget? On the positive side, the Michigan Legislature adopted several of the governor’s initiatives that serve to improve children’s health and school readiness. (more…)

Rising to the challenge

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After a long cold winter, it’s good to feel optimistic again. Spring is here in Michigan, and there are signs that our economy is back on track and chugging along, even if very slowly.

As I work on meeting a critical fundraising challenge issued by the Nokomis Foundation, however, I find myself reminding those I meet with that the economy still does not work for all. (more…)

Let’s resolve to make Michigan healthier

From the January newsletter
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Happy New Year!

As you make your New Year’s resolutions – healthy eating and exercising are my all-time favorites – let’s resolve to make Michigan a healthier place too.

The start of the New Year means that budget setting is right around the corner. First with the governor’s executive budget, then with the Legislature’s public hearings and votes, the budget process is our chance to set our priorities as a state. (more…)

After a century, it’s time for a celebration

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On Wednesday, we will celebrate 100 years of research and advocacy at the Michigan League for Human Services, soon to be the Michigan League for Public Policy.

How time flies!

The League traces its roots to 1912. It began, appropriately enough, during the Progressive Era as the Michigan Conference on Charities of Corrections. A group of concerned citizens (including social workers, judges and attorneys among them) planned an annual meeting about the major public welfare issues of the day. (more…)

A bad, bad, super-bad proposal

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A bad, bad — you might say super-bad — proposal is working its way toward the November ballot.

It is a scheme funded by billionaire Matty Moroun (the owner of the Ambassador Bridge who is fighting Gov. Snyder on a new bridge) — with support from Washington anti-government zealot Grover Norquist — to buy an amendment to Michigan’s Constitution that would work in their favor at the expense of Michigan’s middle class and local taxpayers.

The so-called supermajority proposal is actually a type of “superminority” proposal, allowing a small number of lawmakers (just 13 senators!) to control state revenue and have a devastating impact on Michigan’s democracy and economy.

Here’s why this supermajority requirement, now being considered for the November ballot, is a super-bad idea:

  • It’s bad for the economy. The seven states with similar tax limitations fared worse in the most recent recession than states without them.
  • It would make it virtually impossible to end tax breaks that have harmed our credit rating and haven’t helped our economy, including tax breaks for large, profitable corporations.
  • It’s impossible to anticipate the future. What if there is a Hurricane Katrina-type of calamity? The supermajority requirement would tie the hands of lawmakers when they need to respond quickly. (more…)

Replacing PPT revenue: Priceless

From the First Tuesday newsletter. Sign up here.

One thing most of us can agree upon is that good jobs are the key to Michigan’s economic recovery.

As a former local government leader –  I served on the Huntington Woods City Commission and the Oakland County Board of Commissioners –  I’m alarmed at the proposal to dramatically reduce the Personal Property Tax on businesses, which helps pay for public safety, education and other local services. (more…)

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