Michigan, Michigan Republicans — December 21, 2012 at 7:03 am

Tax the POOR! – Michigan’s tax time bomb begins to explode


The impact of new Republican taxes in Michigan is about to get very real

Back in February, I wrote piece titled “The tax timebomb that explodes in Michigan in 2012 is MUCH worse than you thought”. The piece got a lot of attention, primarily because it was a big news flash that in order to pay for the billions in giveaways to Michigan corporations, Michigan Republicans raised taxes on over half of the people in Michigan. And, make no mistake, true to (Republican) form, the impact was far greater on lower income Michiganders than on our wealthiest citizens.

Here’s what I wrote last winter:

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.

A thousand times more taxes based on income for our poorer residents AND we’re reducing or entirely eliminating a key tax credit, the Homestead Property Tax Credit, for many of them.

Well, this week, the postcards from the State of Michigan arrived in mailboxes across the state, telling these folks to expect to take the hit. Here’s the one my friend Rochelle N. received:

Notice of Changes to Homestead Property Tax Credit
This postcard is intended to inform you of changes that have been made to the Michigan Income tax for the 2012 tax year. New for 2012 is the way the Homestead Property Tax Credit is calculated, which may reduce or eliminate a taxpayer’s Homestead Property Tax Credit.

The groups most likely to experience a change in their credit from the 2011 tax year are:

  • Seniors (65 and older)
  • Taxpayers with Total Household Resources* over $50,000
  • Homeowners whose property has a taxable value over $135,000

Given that each taxpayer has unique circumstances that determine their eligibility for the credit, the Michigan Department of Treasury encourages you to contact a tax professional if you are concerned that these changes may affect you, or visit www.michigan.gov/taxes.

* “Total Household Resources” is a new definition in 2012 and replaces “Household Income” in determining a taxpayer’s eligibility. A full definition is available on the Treasury’s Web site.

That bit at the end is interesting. The main difference between “Total Household Resources” and “Household Income” is that you can no longer take into account “business, farm, rental and royalty income or loss”. If you lost money this way, you used to be able to subtract it, reducing your overall income (and paying less taxes.) Now you enter “zero”. This is the sort of tax credit that wealthier Michiganders can avail themselves of. However, the Republicans have seen to it that this way of reducing your overall income, this tax break, is NOT available to our poorest citizens.

That’s not all that’s coming down the pike. When I spoke with Senate Minority Leader Gretchen Whitmer this week, she pointed out that Michigan pensioners are going to be shocked to see that they now owe taxes on their pensions that they never had to pay before. There was a lot of hullabaloo when that was passed but enough time has passed that many Michiganders likely have forgotten about this income tax increase on our senior citizens. Well, that memory will come flooding back when they file their 2012 taxes in the next couple of months, just like it will for the people who formerly could take advantage of the Homestead Property Tax Credit.

But you can feel better about paying all these higher taxes folks. Because, hey, they were passed by lower taxes/smaller government Republicans! And we should all be thankful that the truly wealthy folks aren’t taking nearly as big a tax hit as you are. And our state’s businesses? Well, they are laughing all the way to the bank.

I’m sure they’ll all thank the little people who made it all possible.

  • Dave

    If this is all true . . . which it probably is, why do voters in Michigan keep electing Republicans?

    • kirke123

      because their STUPID!

      • Hobbes83

        *They’re. Check your sentence before calling others stupid.

    • Rochelle

      Because the Republicans have rigged the voting process due to gerrymandering. Even though our state elected Obama by almost 10 points, we are overwhelmingly represented by Republican legislators. Why? Because they’ve redrawn the maps to favor the Republican party. The Republican motto –> win by any means necessary, even if it means cheating.

    • kirt

      Because Snyder never even hinted that he would be raising taxes on retirees and middle class homeowners until after the election.

  • peoplearestrange

    Dave—Those who continually vote for Republicans over and over, apparently are not ‘thinking’ much, for themselves–they are voting what their parents did and their parents because it is what they have ALWAYS done——who wants to take the time to THINK first and VOTE last!!!

    • townzl

      I live in SC and I’ve always wondered that too. I came to realize that most of this state is rural demographically and can be sparsely populated, with families controlling huge tracts of land and communities. They elect reps. who are beholding to them, without serving the community as a whole, but the rest of the community vote along because of the Good Ole Boy tradition. Investing in infrastructure is only done at the behest of some new industry that may have relocated here, but they’re usually awarded some sort of tax abatement, so it is really the tax payers footing the bill for the improvements while the rest of the communities roads crumble and utility rates soar.
      I’ve found SC not that far removed from the Civil Rights Era, in that any progressive ideas are seen much like an outsider interfering with their way of life, such as it is. We have also been caught in the Tea Party Revolution with Nikki Haley as a governor and the cronyism continues, maybe, just maybe one day we will step into the 21st century.

  • kirke123

    another snyder surprise is going to be a big surprise to many seniors, who are the people who always, always vote! and now families and home owners. this is the way they rob the treasury and we hope they all get kicked out.
    brandon dillon, the man with balls, for govenor 2014

  • Tax the poor to feed the rich. Gotta love the republicans!

  • laura

    I shared all of this last March with a co-worker who is a single mom. She asked what she could do about it. I said don’t vote Republican. She said, “my family is republican, I always vote republican.” I don’t know how to address wilful stupidity. I guess that is what we get from those who cling to ideology so rigidly that critical thinking flies out the window. The understanding is so low, that people vote for a label. They don’t even realize they’ve been betrayed.

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  • Eric

    I believe your math is bad. Rich people in Michigan pay roughly 4.2% of their income in state income tax. There is no way it is .001%.

    • That’s the increase in their taxes, not their overall tax bill.

      • Harry Sachels

        Correct. As opposed to the quite LARGER % increase in middle and poor persons income tax. Okay, Eric?

  • not a happy camper

    I just did my taxes. I am a senior born before 1946 which was suppose to be exempt from pension tax. They lied. I have to fork over $1200. I’m furious. And in case you’re wondering no, I’m not rich.

  • cjcj

    I recently moved to MI from CA and was shocked to find out I am now paying signifigantly MORE in taxes now!! Its no suprise why a signifigant amount of college grads from this state leave shortly after recieving their educations…..The smart run for the hills…and the ignorant stay!! Goodbye MI, I wish I could say it was a pleasant stay, but I would be lying!!

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  • David White

    if this nation and all of the people would unite- Michigan is not alone. all of the 49 other states are heavily taxed. flat tax of 32%, the current system (fed) with over 70,000 pages- not counting states?- the other choice is the Fair Tax- which completely eliminates the IRS! you keep all the pension checks gross- keep all the working checks gross and you are taxed on consumption at 23%, which to me is still too much!these are the choices for now– educate and spread the word
    time to stop balling and get to work. oh and the 9-9-9 also.
    people i think want a fair tax for all.
    everyone pay a fair share– that includes all – no exemptions for anyone
    government would pay same as i and you
    church’s same
    unions’s same
    school’s same
    museums same
    charity and non-profit
    police-fire-ambulance all pay same
    everyone– supreme court,
    only one exemption for me —- the military. period
    everybody else– welcome to the big boys club
    let’s make it all fair.
    best one i have seen so far is FairTax.org
    spread the word and do some research and whine all you can!
    you may think it is all about you– truth is we are all in this fishbowl
    bring back this country

  • CrackerFactory

    You can blame Repubs all you want, the fact of the matter is Dem or Repub, none give a crap about you unless you can some how line their pockets. For the one who mentioned Michigan voting for Obama…LOL good choice, unless you are blind you may notice your Fed taxes are up, everything costs more, you likely make less and hurray for forced higher health insurance costs.

    • Only misinformed people believe their federal taxes went up because of Democrats in general or Obama specifically. The historical facts simply don’t agree with that bit if revisionism/deception. What’s most incredible is that the GOP has convinced people like you that Republicans aren’t responsible for the fact that your taxes are up.

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  • Harry Sachels

    All I know, is I’m in that under $30K group, and I was shocked to see I had approx $170 MORE in tax liability when I did my 2013 taxes. This son of a bitch Snyder has got to be gone. And SOON.

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