Tax day 2018: Why does no one listen to me?

Added April 17th, 2018 by Rachel Richards | Email This Entry Email This Entry
Rachel Richards

Happy tax day! I know this may not be everyone’s favorite holiday, but it definitely ranks up there for me! I love my trash and recycling being picked up every week, the cute park in our neighborhood where my son and his friends play, my public schools, my local library, and, yes, even those pothole-ridden roads that we drive on, and all of this is paid for by taxes. (And you can read more here and here!)

Unfortunately lawmakers in Lansing and Washington don’t seem to be listening to me.

In December, Congress pushed through deep tax cuts that disproportionately help the wealthy and increase the deficit by more than $1 trillion over 10 years, putting at risk services that we all rely on. A new analysis shows that in 2018, Michiganders making less than $22,000 a year will see an average tax cut of $100; taxpayers in the middle class—making between $40,500 and $65,400—will see $780; and Michiganders making more than $470,400 will see an average tax cut of $49,900. What’s more is that the top 20% of taxpayers will receive 71% of the tax benefit. Talk about upside down.

As currently enacted, tax cuts that primarily benefit individuals will go away in order to pay for permanent tax cuts for profitable corporations. While Congress seems certain that this won’t happen—that they will extend the tax cuts as they expire—this wouldn’t help the middle-class any more than the original bill helps the middle class in its first year. The richest 20% of Michigan taxpayers would see 65% of the benefits of an extension of the temporary provisions in 2026 and would receive 70% of the benefits of the proposed extensions and the Tax Cuts and Jobs Act (TCJA) as enacted.

Share of tax changes in 2018 and 2026

Furthermore, immediately following the enactment of these deficit-increasing tax cuts, Congress decided that now is the time to consider a federal balanced budget. This poses very serious risks to our federal and state budget and economy. Requiring a federal balanced budget would not only result in cuts to programs that help our most vulnerable residents but also tip a weakened economy into a longer-lasting and harder recession quicker. While a forced vote failed to advance the measure (requiring bipartisan support and a two-thirds majority), we will continue to monitor the situation because of the impact it could have on our state budget and our Michigan residents.

At the same time, lawmakers in Michigan took advantage of an unintended consequence of the federal tax law to satisfy their tax cut fever. Instead of simply restoring the personal exemption that the TCJA arguably took away from Michigan taxpayers, the Michigan Legislature decided to cut taxes more. Once the plan is fully phased in, the $100 tax cut for a family of four will cost our state $180 million a year. The League was vocal in our opposition to the cut, citing needed public investments, budget constraints and concern over the federal budget.

So listen up!

Taxes do a world of good! They allow us to provide healthcare to millions of Michigan residents with low-incomes. They pay for the police and fire departments that help keep our communities safe. They give us parks and libraries and neighborhood aquatic centers. And they help repair and maintain the roads we use every day.

On Tax Day, remember all the good you’re doing! (Oh and if you haven’t yet, make sure you check your withholding for 2018; you don’t want any surprises when my favorite holiday rolls around next year!)

Rachel Richards

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