Cutting taxes won’t create jobs or grow the economy. Michigan is already facing budget cuts because there is not enough money to fund schools, public safety and other important services that we value. Reducing the income tax would create an even bigger hole in the budget, leading to more cuts and making it harder to create a strong workforce ready for the 21st century, according to a new fact sheet from the League.
Last week, House Republicans released their action plan that included rolling back the state’s income tax rate from the current 4.25% to 3.9%. Reducing the state income tax “remains the House Republicans’ single most important tax-relief measure,” the House GOP said in releasing the plan. This priority would largely benefit the wealthy, who do not need additional tax relief, and it would not improve the economy.
According to analysis by the Institute on Taxation and Economic Policy, $3 of every $5 in tax cuts would flow to Michigan’s wealthiest 20% of taxpayers (annual incomes of $89,000 or more) with the top 1% of earners (annual incomes of $362,000 or more) taking home 17% of the tax cut benefits. Giving to those at the top contributes to income inequality and doesn’t put money in the pockets of those who need it to meet basic necessities.
Across-the-board tax cuts would not boost the economy. They put additional financial strain and pressure on the state budget. Reducing state funds through income tax reductions while revenues are already down would only drain the necessary resources to support education, communities, and infrastructure—all of the critical components to a thriving economy that includes an educated workforce and communities where people and businesses want to locate.
– Alicia Guevara Warren