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On the Snyder budget

The Governor’s call for everyone to share in the burden of recovery for Michigan may sound fair, but a sense of injustice rises when people who have played no part in the general economic decline face economic losses for which they’re not at fault. Until Lansing (or Washington) finds some means of catching up with the culprits who did the economic damage and have them make restitution, those who have earned honest livings and used their resources wisely should be rewarded by fair treatment amidst proposed tax reforms, if no other reward is possible.

Many retirees are those who have worked hard, lived within their means, saved to acquire their homes without tricks or wrongdoings and expect to live moderately and self-sufficiently in their remaining years. And many of those already took a step that has helped the State’s financial situation by opting into 401(k) saving plans when those were offered as an alternative to save the State the cost of traditional pensions. Those savings have already accrued to the State for years; but the stock markets have not been favorable to many who opted into 401 (k) plans. The proposed tax on retirement benefits would be a further setback to those who intended to be more independent as well as to help the State’s financial situation.

The Governor has merely suggested there might be some tax break favorable to lower income retirees, an idea that approaches the notion of a graduated income tax. A graduated income tax would also quiet the furor over elimination of the Earned Income Tax Credits by more honestly recognizing the difficulties of lower income people, retired or otherwise. It could also bring the income for necessary State-supported services, as Charles Ballard’s article (3/16/11) in City Pulse points out.

Graduated income tax would truly ‘level the playing field’, and it would better carry out the Governor’s idea to restructure Michigan’s fiscal planning to be better set for the long range. To tackle THAT by a change in the State Constitution would take energy and capital, both financial and political; but it would be in step with the recovery that is beginning to happen, so why not do it NOW?

— Stephen Osborn, East Lansing

Four points with regard to Charles Ballard’s article ("Snyder’s budget plan," 3/16/11) on the governor’s budget need to be clarified. First, the governor’s first budget action was to take a $1.8 billion dollar budget deficit and double it by giving businesses $1.8 billion dollars in tax cuts (subsidy). Why would the governor, who supposedly is a businessman, make a difficult situation twice as bad? Why would the governor give a tax break to a company like G.M. who just made $4.7 billion dollars in three months or Bill Davidson (owner of Detroit Pistons basketball team) Michigan’s wealthiest individual now worth $4 billion dollars? G.M. and Bill Davidson don’t need a subsidy, but rather they need customers. A far better way to spend the $1.8 billion dollar proposed business subsidy would be to give the money to people (lower and middle class) who will buy Michigan products and services. These people will buy products and services which will eventually force companies to invest and hire more employees.

Second, we constantly here how tough the economy in Michigan is, but the truth is that the state is awash in cash. Michigan corporations have so much money they don’t know what to do with it. General Motors just made $4.7 BILLION dollars in a three month period. Income for the wealthiest 100,000 Michiganders has increased to nearly $1,000,000 on average per year. Michigan now boasts 11 billionaires in the list of Forbes 400 list of richest people. So the issue is not that there isn’t money in Michigan, in fact Michigan is swimming in money, but rather that corporations and obscenely wealthy individuals have most of it and don’t pay their fair share in taxes. The easy solution to balancing the budget is to tax corporations and wealthy individuals more fairly. Illinois just addressed their budget shortfall by fairly raising taxes, and we don’t hear any complaints of people or companies leaving Illinois.

Third, freezing pay or reducing benefits of state workers is the same as raising their taxes. State workers have already sacrificed too much over the years. Taking money away from state workers (customers) means they have less to spend and that hurts the economic recovery.

Fourth, a study by the independent, international accounting firm, Ernst and Young, found that the film industry tax credits in 2010 created 3,860 full time equivalent jobs for Michigan residents in 2010, at an average salary of $53,700 per year, and generated an estimated impact of statewide sales of $503 million in 2010 or $5.94 per dollar of net credit cost, which is almost a $6 to $1 spent return.

Basically, corporations and businesses don’t need tax cuts (subsidies) to thrive in Michigan, but rather, they need healthy and robust customers here willing to spend their dollars. Without customers, no products or services are sold and nobody gets hired.

— Christian Bechtel, Haslett


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