The tax timebomb that explodes in Michigan in 2012 is MUCH worse than you thought


The GOP finally finds a good tax: on the poor

As bad as things are right now in Michigan, they are about to get so much worse that I fear there is a genuine risk of the types of riots we haven’t seen since the 60s & 70s in my state. If you think we have too many failing schools and too many failing cities now, if you think the disenfranchisement of our citizens through the imposition of Emergency Managers was at a shocking level in 2011, wait until you take a peek at what’s to come in 2012.

This is corporatocracy and war on the 99% writ large and writ bold.

Joanne Bump, a senior policy analyst with the Michigan League for Human Services has a terrifying new report out titled “Tax Changes Hit Low-Income Families the Hardest”. The report is HERE (pdf) with an Executive Summary HERE (pdf). I spent some quality time with this report and what I read was both compelling and terrifying. It’s an easy read and I highly commend your attention to it.

First of all, as we all know, last year the Michigan Republicans passed a budget that lowers business taxes by $1.6 billion and increases individual income taxes by $1.4 billion.

It looks like this:

What is shocking is how easy the budget goes on upper income Michiganders and how astonishingly HARD it hits lower income residents. Take a look at the average tax increase broken down by income group:

In fact, when you look at the total state and local taxes as a percentage of income of those making $334,000 or more per year vs. those making $17,000 year or less, the poorest people pay 1000 times more than those at the top of the food chain. The poorest Michiganders pay 1.0% of their income vs. 0.001% for the top earners.

Other things from the report that you should know about the tax time bomb that explodes in Michigan in 2012:

  • Despite continuous Republican screeching about “simplifying the tax code”, this new budget decidedly does NOT make it less complicated.
  • Reduces the Earned Income Tax Credit (EITC) for the working poor from 20% to 6% of the federal credit – a 70% cut.
  • Lowest 20% of income earners pay 9.1% of income in state & local taxes, top 1% pay only 5.6%.
  • All major tax credits except the Homestead Property Tax Credit are now gone. Donations to food banks, shelters, and food kitchens: gone. Donations to charities: gone.
  • Taxes are instituted or increased on private and public pensions for certain groups of senior citizens/retirees.
  • Deduction for children in the family has been eliminated.
  • Homestead Property Tax Credit (HPTC) has been taken away for over a quarter million Michiganders with incomes between $50,000 and $82,650. Seniors with incomes between $30,000 & $50,000 will have this credit reduced by 40%. Only half of the working poor that qualify for the EITC will also qualify for the HPTC.

At the end of the day, here’s a very important thing to remember: Thanks to the new Republican budget, 51% of all Michigan tax payer will pay MORE in personal income taxes in 2012 and beyond. Read that again. Over HALF of Michiganders will pay MORE TAXES because of the Republican budget. This is not Democrats. This is not even the Republicans of yesterday. This is, in fact, a mostly tea party-driven legislature who came in on a small government, less taxes bandwagon, tooting horns and banging tambourines.

And they just raised taxes on over half of our residents. Oh, yeah, and that whole smaller government thing? Republicans passed an unprecedented 323 laws in Michigan last year. Think about that.

One more thing: the reason they give for this sweeping change is that it will stimulate new business growth in our state. But let’s face it, that growth and that economic improvement is not meant for our poorest cities. No business looking to set up shop in Michigan is going to put their business in a city that has a failing government, crumbling infrastructure, poor amenities and underfunded, bankrupt schools. They aren’t. It’s obvious. They will go directly to the newer, more upscale suburban areas to do business.

In other words, the economic growth that this new tax paradigm is supposed to solve Michigan’s problems will do nothing of the sort. Places like Flint and Pontiac and Detroit and Benton Harbor and Ecorse and Highland Park will NOT see the boom that Republicans believe is coming; they will NOT participate in any meaningful way in our impending economic recovery should it ever arrive, not any time soon. These cities will continue to struggle and fail because we have done nothing to invest in their futures. We have done nothing to make them attractive to businesses or to anyone that might wish to relocate.

And, don’t forget: at the same time Michigan Republicans did all this to our tax codes, they stripped a billion dollars out of our statewide school system. Most of the impacts of that have yet to hit so if you think the imposition of Emergency Managers in our school systems is out of control NOW, wait until next fall. If you are a union member that works for a school district, you are seriously at risk of losing anything resembling a decent wage once the anti-union Republicans are done with you this year.

If you think that things were bad for the poor in 2011 in Michigan, you ain’t seen nuthin yet. 2012 is where shit gets real.

  • Rstepp

    I’m in the $33,000 to $53,000 bracket…while you say my increase will be $296 it will actually be $1199.70

    • Rstepp

      Barely in that bracket…$33,240 income.

    • butterflybesos9

      did you vote for the dems in 2010? if you did you have my sympathies but if you voted for the rethuglicans or didn’t vote at all sorry you got what you deserved!! I don’t feel sorry anymore for the 99% you were fucking told what would happen if you voted for the GOP but did it anyway. Now we hear or see your tears. Don’t want to hear it. The people who voted for the GOP or didn’t vote are DIRECTLY responsible for all that is coming down upon you. Got to be smarter than what you were in 2010!!! Harsh but true!!

      • Pazu7

        Sad but true Justine. I am beginning to feel the same way.

      • Andy H.

        I understand your point but why are you assuming that this guy voted republican?  I know you preface your statement with a qualification, but there’s no reason to direct all this at him.

      • Rocky

        I voted democratic but you must know that Snidely Wiplash didn’t give many of the specifics when he was running.  He didn’t say he was going to screw the poor.  He didn’t say he was going to significantly reduce the EITC.  Don’t blame those who voted for Snidely but rather encourage them to vote for Dudley Do Right the next time.

        • Hobbes83

          No, people who did vote for Snyder should be blamed for that.  He never gave any policy specifics and gave generic talking points straight out of the fucking GOP nominee play-book; “simplify the tax code” is one of them.

  • LHorton

    HELLO?!!!!!!!  WHEN are the TAXPAYERS of the State of Michigan- and ANY elected Representative/news media going to BEGIN to discuss the REAL issues here:  GENERAL MOTORS demanding tax break after tax break for OVER 30 YEARS to “keep employment here”- and, for all intents and purposes- LEAVING ANYWAY- with ALL of those MILLIONS UPON MILLIONS of $$$$ in tax breaks that DESTROYED our economy?!  They are currently making 9 BILLION $$$$ PER QUARTER profits……..thanks to we taxpayers having “bailed them out” for over 30 YEARS via tax breaks, a Federal “bail-out”..and NOW LOOK where the TAXPAYERS are………IN THE TOILET.  WHY ARE THE TAXPAYERS NOT SCREAMING “REBATES”?!?!?  WHY are our elected officials NOT mentioning this?!  WHY are they “hiking the Taxpayers” taxes YET AGAIN to “make up” for ALL the taxes GM did not have to pay?!  CAN ANYONE SAY :”CORPORATE WELFARE”?!?!?!?

    • LHorton

      OH- and- by the way- for those of you unaware of this situation………..IT’S GOING TO GET MUCH, MUCH worse in the very near future………… General Motors & the UAW have agreed, IN WRITING in the September, 2011 National Agreement to “relieve the Pension Risk off the table FOR IT’S INVESTORS”!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!  See:…………go to “Headlight” (monthly newsletter)…..October 2011 edition… Recording Secretary’s Report (Mike Keeler).  THEY ARE GOING TO TAKE AWAY THE PENSIONS THAT WE EARNED- so their IINVESTORS can make more $$$$$$$$$$$!!!!!!!!!!!!!!!!!!!!!!!!  So- when the Pensions are GONE, and the Retirees have NO CHOICE , WELFARE (i.e. MORE Taxpayer $$$$) will be supporting the approximately 1/2 MILLION Retirees that General Motors is “DUMPING” because they “want their Investors to make more $$$$$”!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Yet ANOTHER “bail-out” for GM- and this time- they don’t even have to ASK for it!!!!!!!!!!!!!  TAXPAYERS UNITE & REBEL.because the additional TAXES you will be paying for the CORPORATE GREED are going to be STAGGERING…………….and NO amount of additional taxes on the “little people” could EVER cover what GM has already GOTTEN!!!!!!!!!  WHY ARE OUR ELECTED REPRESENTATIVES IN THE LEGISLATURE NOT ADDRESSING THIS ISSUE?!!!!!!!!!  WHY IS THE NEWS MEDIA NOT ADDRESSING THIS ISSUE?!!!!!!!!!!  HMMMM……………..

    • g

      It wasn’t just GM getting tax breaks. At least they were reinvesting in the state while corporations took the tax breaks and then closed shop and moved to Mexico and China. There should be no tax breaks unless your creating jobs here for a set period of time.

      • Catasetumkid

         You mean, kind of like the Movie Industry? 

  • Rstepp

    The pension tax is the most unfair tax I know…those born in 1952 (age 60) will get write offs to avoid paying tax on their pensions. I being born in 1956 (age 56) get NO write offs for ANY of my pension…but what really TICKS ME OFF is when I turn age 60 I still don’t get ANY write offs for my pension, in FACT I have to wait until I turn age 67 to get ANY write offs for my pension. Why should I have to pay 7 more years of taxes than someone else?

    • LHorton

      You shouldnt!  And General Motors should NOT be ALLOWED to RAPE the Taxpayers and leave our economy DEVASTATED, either….with NOT ONE WORD from ANY elected Representative or media taking up the cause.  THE TAXPAYERS NEED TO ADDRESS THESE ISSUES- cause, apparently- nobody else will!

      • LHorton

        WELL.. HOW ABOUT IT, ELECTABLOG?!  Wanna START this discussion?!  Rachel Maddow?  ABC/CBS/NBC/OCCUPY/MICHAEL MOORE……….ANYBODY?!  Appears to US that this is a “scared cow” NOBODY will publicize/begin a discussion about……………ASK YOURSELVES “WHY”?!

        • Stop it. You’re using up all the CAPITAL LETTERS and exclamation points!!!!!!!!!

          If you want to start a “GM is the reason for all our troubles” conversation, start your own blog. I personally think we have much more to talk about with regards to the Republican steamroller that is running over our state at the moment.

          I’m against corporate welfare as much as the next liberal but GM is not solely responsible for the ills of Michigan and it’s short-sighted to suggest that it is.

          Now, quit using up all the CAPITAL LETTERS and exclamation points!!!!!!!!! Save some for the rest of us.

          • LHorton

            My apologies for the caps and exclamation points……..- I admit that the frustration level is incredible with not being able to get this discussion started………..and i guess i did not realize that you would erroneously assume that I thought it was “all GM’s fault”, either.  I just thought that maybe- maybe.somebody actually cared.  Since this is exactly what I am talking about (being told there are “more important issues” on the table than this), sadly, we have to wait until the Taxpayers figure it out themselves. But thanks, anyway for at least acknowledging the posts…..

  • Sonja

    For those who vote Republican you get what you deserve.

    • Yeah, but what about the rest if us that worked our asses off to get Dems elected???

      • Oke200

        And what about all the Dems that stayed home?

  • Think about it folks, the middle class and above Republicans and some Democrats, that voted these Repugs into office in 2010 will be hit the hardest in actual tax dollars.  Also, in photos and videos of teabagger rallies from the 2010 election campaign, the predominance of older people was startling.  So, white heads, how do you like it now that your pensions are being taxed?  I think the only people who have clean hands in this debacle are the poor and working poor, if they voted, and staunch Democrats who voted.

    • Memiller

      Story I’ve told before….

      I was out knocking doors in the Fall of 2010 until I had blisters on my blisters.  I knew we were headed for electoral disaster as I canvassed these solid Democratic lower middle class neighborhoods and found voter after voter who had come out for Obama planned to stay home. “I lost my job. If I vote, can you get me a job?” “My house was foreclosed on, I’ve got bigger worries than voting” “I voted before, and it didn’t change anything. Why should I vote again?” To this last woman, I replied, “To keep things from getting worse.” She said, “Things can’t get any worse.” I said, “If you think things can’t get any worse, you lack imagination.”

      Wonder how many folks who stayed home and got hit by the EITC cut have put two and two together?

      • Ketownse

        Yeah, I never understood people who couldn’t even make the effort to vote.  I was unemployed during the 2010 election, so I didn’t even have the money to take the bus to my polling place, so I walked about 4 miles just so I could vote.  

  • Meyers333

    Rick Snyder is not a politician, yet, learning to love the PERKS he is getting at the expense of we taxpayers.  The State of Michigan suffers, as many other States, the LACK OF RESPONSIBILITY fot the states” budget.  SO MANY YEARS of mis-managed funds…..WHY NOT put the elected on trial to find the missing cash?    BECAUSE IT IS EASIER TO TAX THE CRAP OUT OF PEOPLE.          Christy.   State of Michigan.

  • Golfguru53

    Does any one know or Realize that we retired persons will always share the largest cutbacks because a great percentage of us will not do what is neccessary to vote on issues that affect the retirees.That is get to know where Politicians are coming from,their stand on the issues and just what their leanings are towards{except the NERD}he was tight lipped about what he wanted to do and now A Bridge to Canada?,politically, on issues of taxation,abortion,Union rights and collective bargaining. We all need to dig a little deeper and talk with our friends and co workers etc and yes blogs too……..

  • kevin albert

    I live in northern Michigan, you talk about a repressed economy yet all these low to middle income people up here still vote republican, I dont get it. Local store owners  say republicans are for small buisiness, so these guys thinks that voting republican is going to help them sell more bait , or sell more beer and chips, ARE YOU KIDDING ME?

    • Jillamanare

      Kevin, I wondered the same thing myself for a very long time, and then I read a story explaining it. To put it very simply those low to middle income people who vote republican want to think they are in that group of “upper class” so they buy into it, and vote for the republicans…….I wish more people would do their homework before going to the polls, but alas there are far too many who don’t……..very sad

  • Jzarembo

    Where are all the “recall efforts”?  If the people are getting screwed we should rise up and recall all these ASSHOLES, INCLUDING SNYDER who are passing these stupid laws!!  I chaired a recall effort in our Township to recall the Supervisor because he is an ASSHOLE and got more signatures to recall than he got votes for election.  RECALL!  RECALL! RECALL!     And vote them out of office this November !!!!!!!!!!!!

    • catasetumkid

       There are several recalls planned, and at least one (for Pavlov) that I know started recently.  We failed this summer due to lack of union or party support.  The plans are beginning now for another recall attempt this summer.  Please join the effort being organized on Facebook.  The party wants to throw it’s money behind the 2012 house elections.  We need to overturn the republican majority and that will minimize what actually makes it to Snyder.       

  • cassandravert

    I wrote a few articles about Michigan last year. 
    If they really wanted to stimulate business, they would pour money into education, but clearly they are not doing that. If they wanted to simplify, even a flat tax would be less regressive than what they have passed. So as is common among Republicans, the reason they say they are doing something does not pass the test for being the real reason.

    The pattern of legislation in Michigan points to a goal of getting rid of most poor people, taking their property by operation of law and passing it on to the wealthy for a sweetheart price, and generally turning the state into a refuge for the wealthy, a giant gated community with upscale services whose new motto is noblesse oblige. Instead of the company town of a hundred years ago, an entire corporate state. Michigan is their foothold, their incubator. If they can get away with it here, if they can make it work for themselves here, they will try it elsewhere.

  • Now thats Class Warfare!!

  • Fillyinmi

    I agree with all that is said here.  So what are we going to do about it?  This effects millions of people, especially those of us with pensions and low/fixed incomes.  We should be able to organize and make our voices heard.  More revenue needs to be made by reinstating business taxes and quit trying to balance the budgets on the retired and middle/working class.  Unions, retirees and low /middle class need to all organize and make our voices heard loud and strong – t”that we are not going to take it anymore!”

  • Tbenn0791

    Go and volunteer at your local Democratic Party headquarters. Sitting down and typing this stuff isn’t going to work.

    • If you’re talking to me, I am the co-vice chair for Precinct Organizing for the Washtenaw County Democratic Party and on the WCDP Executive Board. I was also the Neighborhood Team Leader for Scio Township for the 2008 Obama Campaign for Change and the Ann Arbor Coordinator for Organizing for America for nearly two years after the election.
      Thanks for the advice, though.

      • la58

        Nice to see that people are starting to wake up. Get out and VOTE if not shut the fuck up.

  • barrytonmi

    Our last recall attempt for Snyder was extremely disappointing.  So many people said they wanted Snyder out of office, as well as many of the congressmen.  Unfortunately, when it came time to sign the petitions, many of those people didn’t want to sign for various reasons (I’m afraid they will come after me; things have to get better; oh, they aren’t any worse than others we’ve had, etc.).  A new Snyder recall campaign will be starting this spring and I certainly hope that Michigan voters, who are now seeing just how horrible things are getting, will feel motivated to find petitions to sign.  But then they will have to be motivated enough to also go to the polls and vote.  

  • Betsyh

    Key point missing in this article: most businesses are not going to go to a state where the majority of consumers HAVE LESS MONEY TO SPEND!!  Doesn’t matter what the reduced tax burden on business is.  

    What business is going to use their tax savings to expand or add jobs IN THAT STATE if fewer residents can afford to buy their products?   

    Well, as the article does allude to – except for luxury goods and services, that is.  
    But there aren’t enough of the 1%, even the really fat ones, to support most local businesses, let alone Walmart.

    When in the name of all that’s logical is America going to wake up to the fact that it is demand and consumption that drives our economy, not investment, not entrepreneurs.  

    CONSUMERS need relief, both in the form of lower taxes, higher wages, help with mortgages, and longer paid vacations!!   (Those middle class who have money to spend don’t have enough free time to actually spend it.)

    When this is all over and done, watch all the Repubs and other 1%ers point fingers at the Dems for “losing the American middle class”.  Because fascists know better than anybody how a repeatedly shouted big lie drowns out the truth.

  • Krazee026

    I agree with most of these posts, but if you think voting for all Democratic government is the answer, you are only fooling yourself.  A mostly Democratic government has no clue how to spend the money it has and assign tax breaks to the right places, as history has shown.  Why do you think most of the state voted Republican?

  • Mrembos (former ‘gander)

    This is simple.  Those who make 334K and above; and the corporations getting tax cuts are the ones who paid to get the current crop of clowns elected.  They ‘bought’ themselves lower taxes.

  • This shows what a joke it is when the Republicans calim they are the party of lower taxes.  What they mean is lower tees for millionares and corporations and less services and higher taes for the poor and middle class.

  • Rick

    I agree with electablog, I too have been a prcinct delegate for 12 years and have been on the Kent county Democrats executive commitee for 10 years. Get envolved people and get out the vote, if we could get democrats to vote in every election the repuckigans would not stand a chance.

  • Jdafixa

    I’m seeing a lot of “You got what you deserve” rhetoric in these comments. This, to me is a really big factor in the myriad political problems we face. May I suggest seeking out these people who were misguided or just plain bullshitted by the Repubs, and talking sensibly to them about how they made a mistake and perhaps, based on some factual information you can provide, they can rethink their leanings next election cycle. “Ha ha motherf**ers, you got what you deserve!” Does absolutely no good for anyone. It helps those who seek to divide us. If we, as Americans, are going to beat this corporate political machine, we are going to have to work TOGETHER.

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  • rob

    You retired at age 49 and now expect to pay NO state income taxes while the rest of us that have to work pay your way?  

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  • Bob

    This entire article is such a bunch of BS, it’s hard to pick which lies to answer. Let’s take the easiest: “the poorest people pay 1000 times more than those at the top of the food chain.” WHAT??? So, when I, as a rich guy, pay $10,000 of the money I’ve earned to the state, my poor neighbor pays ten million dollars???? I don’t think so. This whole article is full of that kind of math. Wake up America!

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