Ducking Tax Increases

by Tim Skubick
October 23, 2009

The mere mention of the term “tax increase” sends otherwise stout, hardy legislative men and women heading for the high grass … and with good cause.

Michigan’s political history is forever contaminated with tax increase fallout: two Democratic state senators voted for one in the early 1980s and were recalled.

But not all the “tax increase” fallout has been as lethal. In fact, two years ago when the threat of recall was launched against a new batch of lawmakers, the effort fizzled like a firecracker on a damp 4th of July.

So why all the fuss over Gov. Jennifer Granholm’s attempts to raise new revenue through what she terms a “painless way” of doing it?

At present count there are about eight revenue issues on the table, none of them a tax increase.

Item: Expanding bar hours from 2 to 4 a.m. No one is going to tax you for staying at your local pub if this thing is adopted. The bars will pay $1,500 to the state for the extra two hours. But that is a voluntary fee hike.

Item: The 3-percent doctor’s “tax” has the white coats whining as if they had taken the H1N1 vaccine and got the swine flu anyway. If you believe Sen. Roger Kahn, himself a heart doctor, this is not a tax increase.

“If I give you money, that is a tax increase. If I give you money and then I get a load of money back, that is not a tax increase,” the Saginaw Republican explains, as the state stands to reap $700 million from the federal government and most doctors will actually make more money if the governor and Kahn are right.

Item: Lopping 15 percent off the top of tax credits the state now awards to companies that may not be creating many jobs. Even Republicans have put that on the table, and they sure as heck aren’t calling it a tax increase. One could argue it’s a back-door tax boost, since the tax credit you were getting is reduced, but no recall effort could be launched over that.

Item: The governor wants to freeze a $100 increase in your personal state income tax exemption slated for this year. Spread out over one year you would lose about $4.35 for every person in your family.

Item: A tax credit for the truly needy would be frozen this year, and Republicans would like to take the savings and give it to business for tax relief. The governor doesn’t like the notion of stealing from poor Paul so that rich business titans can fatten their bottom line. But either way, neither side is calling the freeze a tax hike.

Finally, they’re talking about expanding gambling by instituting a new pull-tab lottery game and/or allowing more video horse races at the track. Again, it’s voluntary.

Despite these “facts,” the notion that they are still a tax hike prevails.

“Look. If I give money to the government, it’s a tax increase,” laments House GOP leader Kevin Elsenheimer, who should be choking on the Kool-Aid he’s drinking.

Even the aforementioned Dr. Kahn bemoans the “tax increase” label when sometimes it does not apply.

Just because it quacks like a duck and walks like a duck, in this instance it is not a duck. Quack. Quack.

Tim Skubick is Michigan’s senior Capitol correspondent and has anchored the weekly public TV series “Off the Record” since 1972. He also covers the Capitol and politics for WLNS-TV6 in Lansing.

Tim Skubick Extra Extra…
(A weekly bonus for Dome readers)

Hey, Boss, the Gov is Here
To say this governor is overly competitive would be understating reality. She is competitive sometimes to a fault, but this latest example was not a mistake.

Ever since Gov. Jennifer Granholm vetoed that $52 million in state aid to schools that are a little more upscale, there has been a pushback aimed at her. The veto was a gutsy move, and her inner-circle advisors warned her to brace herself for a firestorm of criticism … which, of course, she is getting.

On Wednesday, she was in the Detroit metro area and monitoring, like a hawk, all the local radio claptrap. Apparently she heard a guy named Randy Liepa honking on about how the governor was at fault for slicing $4.7 million out of his Livonia schools budget.

Finding fault with anyone who is competitive is just inviting a retort. Sure enough, she retorted by showing up in his office, unannounced, uninvited and ready to set the record straight.

“Hey, Boss, the governor wants to see you!”

Superintendent Liepa refused to disclose what was said in the meeting when WWJ NewsRadio950 made an inquiring phone call. But a different source indicates the governor told him she was not to blame.

In an earlier news conference, the governor pinned that directly on Senate Republicans in general and Sen. Mike Bishop in specific, and you can be pretty much rest assured she repeated the blame for the surprised Mr. Liepa.

Guess that will teach him a thing or two about being in the ring with this governor. BTW, there are unconfirmed reports that Liepa was not the only one to get a surprise phone call or visit as the hubbub over the veto reaches fever pitch and the governor competes to shift the blame.

Which is it, Mr. Bishop?
Since last February, the Senate GOP leader has steadfastly insisted that the only way to eradicate a $2-billion hole in the state budget was to cut state services. And so isn’t it interesting that when the governor did just that this week on a portion of the school aid bill, Sen. Mike Bishop went bonkers.

The Oakland County budget-cutter accused the governor of political “extortion” when she vetoed $52 million earmarked for more well-to-do school districts, including a ton of those in Bishop’s own backyard.

Not only did he use the extortion charge, he tacked this on for good measure: “She has breached her fiduciary responsibility as CEO of this state” by taking a “divot” out of the school budget.

What’s the saying about having it both ways?

Gov. Jennifer Granholm didn’t want to make the cut, but she claims she had no choice because Bishop and his GOP cronies sent her a K-12 bill that was underfunded.

Granholm’s budget guy, Bob Emerson, asserts that if anybody is guilty of neglecting his or her “fiduciary responsibility,” it was Bishop.

The senator is spot-on right when he says the governor is using the veto to force the GOP senators to raise revenue to restore the $52-million cut that could catapult some schools into insolvency.

The governor confirms that when she asks Bishop to stop being “rigid” about finding new money. And a Democratic source who has talked with Bishop about new revenue that would not be a tax increase reveals that Bishop is willing to discuss shaving off some money from current business tax credits that may not be working.

Could they find enough money to restore the school cuts?

You bet.

Will they?

With these guys, who the heck knows.