by Tom Shields
August 16, 2009

It’s that time of the year again.

Kids get ready to go back to school. Farmers begin the harvest. Football is in the air. And, of course, the annual tax-and-spend budget marathon ends with a sprint to the October 1 finish line.

That springtime vow, “we’re going to get this done by the Fourth of July,” was nothing more than wishful thinking, or term limit naiveté. Tough decisions don’t get made until they have to be made, especially when they require raising taxes or cutting spending.

Once you get beyond the basic beliefs that Republicans don’t want to raise taxes and Democrats don’t want to cut spending, the difficulty becomes trying to figure out what basic public policy priorities, if any, are being used — by either side — to determine a course of action.

In the game of “I’ll show you mine, now you show me yours,” it seems the Republicans gained the upper hand by trotting out a balanced budget plan that doesn’t raise taxes.

That move clearly put the governor and Democrats back on their heels because, politically, they cannot respond in kind with a plan that raises taxes instead. Far more legislators have lost elections because they proposed raising taxes than have lost for proposing budget cuts.

It appears the governor and Democrats expected Detroit Renaissance, Patrick Anderson, and others to roll out their tax-restructuring program to save them from having to propose tax increases themselves. But Detroit Renaissance president Doug Rothwell threw a monkey wrench into that plan. Apparently the Renaissance clan couldn’t reach a consensus themselves, and have put off making recommendations until the 2009-10 budget has been passed.

Without the Detroit Renaissance lifeline, the gov and her tribe are on their own. The question now becomes how to raise taxes in this economy and still win in the next election cycle. This appears to be their plan:

• Throw it all against the wall and see what sticks. Rumor potential tax increases on beer, water, entertainment, sports, and cigarettes. See how loudly folks associated with these products squeal, and take those items off the table that receive the loudest squeals. The idea of a beer tax lasted 24 hours. We’ll see how long the rest last. (Disclosure: My company assisted in the successful effort to prevent a sports and entertainment ticket tax in 2007.)
• Don’t call it a tax. Call it a user fee. Any fee increase that’s not on your pay stub or your property tax bill is a possibility. Gasoline, registrations and licenses are now user fees. Local governments already charge a 1-percent processing fee to collect your property taxes. Maybe a 1-percent fee to collect payroll taxes could be slipped by?
• Call it a tax loophole closer. Last year’s tax incentives are this year’s loopholes. The gov says she has 11 tax exemptions to eliminate to raise $230 million. What’s the big deal if you have to put $1.06 in a vending machine instead of a dollar to buy a pop? I’m sure I have an old change purse in the drawer somewhere.
• Cut those tax expenditures. Treasury says that the State has $35 billion in tax expenditures. Since that would more than double the current tax load, I assume that category includes anything that is not currently being taxed. I wonder if it includes the $120 million for Hollywood moochers. Let’s start with taxing health insurance benefits and see how that flies.
• Go after low hanging fruit. Sin taxes are like user taxes, but on steroids. They are always the easiest to pass and justify because higher taxes on tobacco and alcohol will dissuade people from sinful behaviors, right? Of course, you can’t raise them too high or people will completely stop their behaviors, and then the State won’t collect enough money. Maybe we could assess fees on moving vans leaving Michigan? That could kill two birds with one stone.
• Don’t tax you, don’t tax me, tax the guy behind the tree. This was the Obama theory of taxing everyone else to pay the costs. Tax the rich. Tax business. Tax tourists. Just don’t tax me! Question is, who’s left behind the tree?

What the final mix of tax increases and cuts will look like is anyone’s guess. I’m betting they will look a lot more like the GOP plan of more cuts than increases, with Obamabucks to the rescue for balancing the rest.

With Michigan’s economy in the tubes, legislative approval ratings hovering around 20 percent, the governor’s below 40 percent, and 80 percent of voters believing the state is heading in the wrong direction — asking taxpayers to pay more now would be like Michigan’s own Cash for Clunkers program.

No taxpayer I know is willing to shell out more cash for a clunker of a government.

Tom Shields is founder and president of Marketing Resource Group (MRG), a Lansing-based political marketing and public relations firm.