LANSING (WWJ) – Governor Rick Snyder calls it a big victory for Michigan and for businesses in the state.
A broad plan that would cut overall business taxes, eliminate some tax credits and raise many Michigan residents’ income taxes is on its way to the Governor’s desk, after the plan squeaked through the State Senate.
The plan passed the state Senate by a slim 20-19 margin, only after Lieutenant Governor Brian Calley cast the tie-breaking vote.
Speaking live on WWJ Newsradio 950 Friday morning, Snyder said businesses are already applauding the move.
LISTEN: Snyder talks to WWJ
“If you look at it, just to give you an illustration, I met with a large group of accountants yesterday, the people that do these returns, so they actually get paid for doing these things. When I announced the Michigan Business Tax was going away, they were applauding loudly because they hate it so much. Because it’s a terrible tax that people can’t understand that was treating business unfairly and we needed to get that burden off of the back of the people that are the job creators,” Snyder said.
This new bill replaces the Michigan Business Tax with a 6 percent corporate income tax while eliminating many types of tax credits and exemptions. It also ends several tax exemptions for seniors and retirees.
“This is an important accomplishment for all Michiganders, because it’s really the cornerstone of our focus of creating more and better jobs. And that’s what this will do in the sense that the Michigan business tax was a job killer. And we’re going to get that ‘open for business’ sign up and let’s get going on creating jobs,” Snyder said.
The Republican Governor, who’s expected to quickly sign the measure once it reaches his desk, said the proposal is key to his plan to reinvigorate the state and make it more attractive to businesses and jobs.
WWJ Lansing Bureau Chief Tim Skubick said Snyder isn’t the only political winner in this situation.
“Democrats actually got something in this deal. The Governor agreed with the Senate Democratic Leader that he would bind down his $470 cut per pupil by another $150 per pupil, to make it around $300,” Skubick said.
What did the Governor have to say about that? “Actually, I have no idea where that came from and I don’t know of anything like that,” Snyder said.
Senate Democrat leader Gretchen Whitmer said the Governor’s agreement to buy down his education plan was part of their negotiations and schools should not be cut at all.
“We’ve done town halls all across the state and people said ‘I’m willing to chip in, but not just to pay for a business tax break. I’m not going to sacrifice my schools and tax my pension if it’s all going to go to alleviate any tax burden on businesses in the state of Michigan,” Whitmer said.
But the Governor thinks school districts and their employees need to assume some responsibility.
“We did the math that if you looked at school districts in our state and employees contributed 20 percent toward their healthcare premiums instead of the current zero to 10 percent that most districts do, that would account for more than 60 percent of the cut,” Snyder said.
“There are other best practice procedures that other districts can do to hopefully make up most of this cut. It is hard work, it is difficult, but there are very positive things that districts can do themselves, they just need the conviction to go after it and do those tough calls,” he continued.
Part of the new plan includes delaying any more cuts in the state income tax. Once good times do return, does the Governor see a Michigan income tax of under four percent?
“Again, we need to look at the total budget. That clearly is the goal as we grow our economy and in fact, the income tax rate will drop a tenth of a percentage point going into 2013. And that is part of the tax package, to have one-tenth of one percent drop,” Snyder said.
Meantime, the Governor remains mum on whether an agreement is in place to provide some funding relief for Michigan Public Schools, as part of his budget deal.
Senate Democratic leader Gretchen Whitmer told WWJ that as part of yesterday’s budget agreement, the Governor has agreed to not cut so deeply into the education budget. She said the plan is to return an average of $150-per-pupil to the budget.
If true, that would mean the state is still looking to cut funding by an average of $320-per-student. For his part, Snyder said he has not discussed any precise numbers.