A VIEW FROM THE LEFT: CHAMBER OF REPUBLICANS

By Jeff Winston, MichiganLiberal.com

It should be no great mystery that the secret right arm of the Republican Party is… the Chamber of Commerce.  Most legislation introduced by Republican legislators is actually written by the Chamber, not the actual elected legislators or their staff members. 

The theory here is: If it is good for the businesses or corporations; it is good for Michigan.  This is a concept which has always seemed to elude me.  Democrats like myself have a different ideology, ours is: What is good for the people and families of Michigan is good for Michigan. 

The Republican-led Michigan Senate has not only shot down the Governor’s budget plan and her 2% service tax; but they have failed to responsibly negotiate or accept a compromise to settle the differences in budget funding.  Majority Leader Mike Bishop (R- Rochester) has emphatically stated that the entire budget crisis must be repaired with cuts and cuts alone; no tax increase would be acceptable to generate revenues.

However, as soon as the Chamber of Commerce chimes in with their idea of raising the gasoline tax (not diesel); Bishop and gang slide in lock-step with the idea.  Republicans have not yet replaced the $1.9 billion Single Business Tax, as promised.  Instead, Republicans are now proposing (as written by the Michigan Chamber of Commerce) to raise the state gasoline tax an additional nine cents. There is no talk, however, of raising the 15-cent tax on diesel fuel (used mostly by businesses) to the same level as the 19-cent gasoline tax, let alone the national average of about 22-cents.  The GOP's gas tax hike could actually cost taxpayers, especially families, more than the service tax, which was estimated at $16.80 per taxpayer per year.  The Chamber’s plan would cost a family $45 per vehicle, driving 10,000 miles a year at 20 miles per gallon.

Once again, the GOP under the direction of the Chamber of Commerce is shifting the tax burden from businesses and corporations to the individuals and families of Michigan.  These businesses depend more on the infrastructure (roads, rail, etc.) of the state than the average person; trucks and service vehicles cause more wear and tear on our roads than cars or even SUV’s could ever cause.  Yet, the Chamber is insistent that the people provide for the welfare and benefit of the corporate and small business needs by shifting the tax burden away from the businesses and placing that burden on the people.

This disconnect is really damaging Michigan.  For nearly 25 years, Republican Legislators have chopped-up the Single Business Tax.  In 2006, when the SBT was repealed, only 39% of all Michigan businesses were responsible for 93% of the SBT tax burden.  The rest of the businesses have been given special exemptions by a multitude of bills over the years which are mostly responsible for the ineffectiveness of the SBT.  Don’t get me wrong.  I, like other Democrats and Republicans, agree that the SBT was an albatross on Michigan business and job growth.  However, when the tax was repealed, it was supposed to be replaced with a fair and equitable business tax to replace the revenues that the SBT generated.  The ‘bait and switch’ by the Republican legislature is irresponsible.  Refusal to regenerate those lost revenues is to give all Michigan businesses a pass on paying their fair share to do business in Michigan.  Meanwhile, the average folks like us; families who are already stretched to the limits will be responsible for funding Michigan through a gas tax or whatever else the Republican Legislators can throw at us on behalf of the Chamber.

The Michigan House Tax Policy Committee heard testimony back in February regarding the budget crisis.  Testifying, were two former budget directors who served in the Engler Administration; alleging that budget cuts alone will not resolve the state's fiscal problems.  Don Gilmer, currently Kalamazoo County's Administrator and Doug Roberts both prepared Executive Budget proposals for former Governor John Engler and served on the Governor's emergency fiscal advisory panel.  In their comments, both men indicated that it is imperative for the two parties to work in unison to develop a solution to the uncertainty that exists in the state's tax structure. They went on to claim that the current tax policy is stunting the state's economic recovery.

Both witnesses stressed it is virtually impossible to resolve a projected $900 million deficit in this fiscal year by implementing spending cuts alone.  They also noted the cuts enacted this year will not address the looming fiscal deficit facing the state in the coming fiscal year.  To the claim that a tax increase is a "non-starter" within the Legislature, Mr. Gilmer, a Republican and a former Chair of the House Appropriations Committee stated, "To sit here and say we absolutely will not raise taxes defies reality more than anything I've ever seen."

However, one needs to put things in to perspective.  The Chamber of Commerce is a member organization which only exists to lobby on behalf of their member businesses and their needs.  It is sad that their lobbying power far exceeds that of the average person or typical family.  But the pure fact of the matter is that as long as the Chamber of Commerce ‘OWNS’ their legislators; the people will be pushed to the wayside for the benefit of more corporate growth at the expense of individuals and families.  The only way for the people to fight back is to pay attention and watch their legislators.  Those who do not properly represent their constituents needs to be voted out of office in the next election.  The people need to remember that they hold the power to chose their legislators and to hold them accountable for their actions in office.

The bottom line here is simple.  Democrats in Lansing have been asking for a dialogue with the Republican Senate.  They have been trying to work toward a fair and equitable solution to the budget crisis.  This crisis is not the fault of either party.  The crisis is a result of outsourcing and a reduction in manufacturing state-wide.  However, one cannot negotiate with someone who is unwilling to talk.  Mr. Bishop has offered his plan, ‘all cuts, and cuts alone’.  This emphatic outlook is not a means to a dialogue, it does not offer a way to compromise, and it does not serve the people of Michigan.  By definition, a compromise is a system of gives and takes.  If Bishop is unwilling to allow for any give, a compromise cannot be made.  Regardless of which political party you subscribe to; the goal of each side should be the same… to do what is best for Michigan, not just the members of the Chamber of Commerce.

Comments

[wez]

i just got done reading this article on the chamber of repubs. this really hit home. i just happen to live about 500 yards from the wyoming chamber of repubs. i can say that i don`t agree with anything they stand for. several years ago, one of our children came home with some extra paperwork tucked in his backpack. i happened on the papers and to my shock it was an advertisement for the wyoming chamber of retarts. well being i`m the thorn in the city of wyoming`s side. i took the time to call and threaten the super and the chamber with legal action regarding the use of our children as billboards for the city. well as you can imagine, the city and the super were crapping there pants. with promises that this would never happen again. since that time i have never seen anymore paper work advertising the chamber of idiots or for the city stupids(city counsel). its my honor to read from this website. i have finally found a place were i don`t have to feel like i`m part of sheep heard. its about time someone took the gloves off,and gave it to the people we pay for services of this state. thanks for opening my eyes to the fact that i`m not alone in my strugle to swim up this river. have a great day and keep the open mind for all. wez ps. i can`t wait to drop off a copy of this letter to them this morning. he he he!

[JWinston70]

Well Wez, I am glad that you enjoyed the article. The Chamber of Commerce involvement is politics has never been a closely guarded secret. However, the extent of their involvement surprises many people. Keep fighting the good fight. - Jeff

[Ryan]

Can you invite a "business" over for dinner?

I like how some are for people and, hey, even families yet seem oblivious to the concept that a corporation or business is just a conduit for people and, hey, even families to conduct business.

You can't tax "business" unless you plan on inviting a business to dinner someday.

-Ryan

[JWinston70]

Well Ryan, while a business isn't quite as tangible as a person; a corporation as an entity is given most of the same rights as an individual. So no... you cn not invite the corporation to dinner. However, that does not mean that you can not tax the revenues or profits of a corporation. There are costs associated to doing business. Infrastructure, safety, fire protection, security, etc. are all utilized by corporations, and in some cases like infrastructure... used much more than by a single person. To not tax businesses, small or corporate, is a backwards way to think.

[Ryan]

Who said anything about not taxing them? That's a strawman argument.

If you didn't tax a corporation everyone would incorporate.

But, you completely missed my point. There's an inconsistency to an argument that veils itself in being "for" people and families and against business.

Last time I checked the owner of where I work is a person with a family, are you fer him or agin' him (using my best Yosemeite Sam voice)?

I look forward to your reply.

Best,
Ryan

[Occasus]

While I'm less then excited to be facing the prospect of higher taxes, the idea that we can increase the taxes businesses pay and not have them passed on to the customers is just laughable. So at least the Republican tax increases are honest and transparent.

[Ryan]

Occasus,

The thing is, companies cannot just pass on cost increases to their customers (so-called Cost-push inflation; we're it true no company would ever go out of business. And a lot of what looks like cost-push inflation is really demand driven). Sure, some industries have pricing power. If your dentist gets a tax cut you're unlikely to see a lower bill on your next cleaning.

But, tool and die companies, to pick one, have zero pricing power. And, low margin industries get affected even more. And, that's why the tax-free zones for such companies is a bad idea. The break will get competed away, quickly, with those outside the zones hurt the most at first - leading to more problems and more gov't directed "solutions".

If your Net Profit Margin is 2% and your costs go up $1,000 you need an additional $50,000 in revenue to replace that lost profit.

I'd daresay, as compared to many other states, Michigan has a fair share of low profit margin, zero-pricing power industries. Though, please, don't ask me to prove this...

-Ryan

[Anna Lee]

There is absolutely nothing wrong with The Chamber of Commerce working on behalf of businesses to remain viable and strong. We may not all need them or use them, but they do serve a public and private good. Like it or not, ALL groups have their champions. The Chamber is there for businesses, it's no secret.

Why is it that when an economic downturn happens businesses and their supporting groups always tend to be made the bad guy? Certain groups always feel they have the answer to the problem, why...

Tax businesses at higher rate.

Make them increase wages.

Make them offer better benefits.

Write new laws that impose greater operating burdens.

Make it harder for them to stay in business and so on.

Like Ryan said earlier, businesses are not just empty things. They are living things made up of men, women and young adults.

Many businesses can show generations of family members have worked endless hours and suffered personal sacrifices to keep a business going decade after decade. It's no easy task. Each one of those businesses have families, friends, and community employees that all contribute in that operation. Since 97% of American businesses have under 20 employees - the importance of small businesses in every city in this state can't be understated. Groups like the Chamber can be very helpful in navigating small businesses through the unbelievable maze of taxes, laws and complications involved in operating a company.

If anyone out there runs a small business, they know what I mean. We are already getting taxed heavily, especially under the SBT program. Anyone who RUNS a business knows full well how much tax a business in Michigan can pay - not only city/state and fed taxes, but taxes on equipment, buildings, upgrades and finally profits. Unlike the average citizen who gets taxed from the city/state/fed, businesses get hit many times over beyond the profit arena. If citizens think they have a heavy tax burden, it's nothing compared to what businesses in this state have been bearing for many years now.

In the end, it's small business ownwers who have been the risk takers. They have been the ones to suffer personal burdens in this journey to independence. It is their courage to do more and be more. When they succeed, that success spills over to everyone from family and friends, to employees and neighbors, and over-all to the community at large. It's understandable that not everyone can run a business and that's why most businesses value their employees so much. We need both leaders and followers.

The Chamber helps to get businesses there if they can't do it alone.

As for the tax issue, the only groups that have gotten tax breaks are those that the Governor has hand picked to get "special tax abatements or long term deferrals" to get them to stay or come to this state. Bottom line though, one group doesn't pay - everyone else makes up for it.

Playing the frustrating game of 'the have's' against the 'have nots' is simply wrong. It does not help the state long term. You can't balance the financial woes of the state off the many for a few.

Smart businesses understand that.

It's time government did too.

Small businesses will be the first to support that if you tax us fairly, we have no problem with it.

But, don't make the small business or the supporting Chamber the bad guys when few others are willing to take the chance to get ahead. We are doing the best we can with the obstacles in our way in this state.

[Rose Bogaert]

I do not care if they are Democrats or Republicans. Taxpayers are tapped out. I am tired of hearing the State of Michigan has no money. Where do you think the taxpayers will find it? Corporations don't pay taxes they just pass it down.

Join Americans for Prosperity, The Michigan Taxpayers Alliance, The Wayne County Taxpayers Association, The Kalamazoo Taxpayers Association and others on April 18 in Lansing for the Michigan Taxpayer Tea Party

Please join us for the Michigan Taxpayer Tea Party on the steps of our state Capitol on Wednesday, April 18, at 11:00 a.m. We need you to come and join the voices of the hard-working men and women of our state in saying 'enough is enough!'

At every step we've heard from small-business people, including contractors, realtors, restaurant owners, and others, who say Governor Granholm's tax plan would do their businesses in. Our state government spending continues to increase every single year, while our own incomes are going down and jobs are bleeding out of our state on a daily basis.

April 18 is taxpayers' day to come to the Michigan Capitol and let Governor Granholm and our state lawmakers know we will not stand for job-killing tax increases. Our goal is to fill the Capitol lawn with men and women like us -- men and women who are working hard to support our families while Michigan weathers this economic storm.

Bring a tea bag to give to Governor Granholm. Bring your children to watch democracy in action. Bring as many friends as you can to ensure taxpayers' voices will be heard in Lansing on April 18!

[JWinston70]

I am NOT anti-business. I own a business myself. However, I am extremely against businesses NOT paying taxes. Everyone, Dems and Repubs alike, agreed that the Michigan Single Business Tax was an unfair burden to most Michigan businesses, especially manufacturing. However, once repealed, it was intended on being replaced. To NOT replace that revenue, 25% of Michigan's budget, with a fair and equitable business tax is iresponsible of our Legislators. Granholm was asked by the Republican legislators to reduce state government. Since she took office, she has reduced the size of Michigan government by $3 BILLION. She did what was asked of her to do up to this point. Mike Bishop and the Republican Legislators who refuse to talk about generating revenues for the state (whether by new taxes or fees) are not keeping up with their end of the bargain. They promised that they would replace the SBT with a reasonable replacement. Now it is a bait and switch. They got the reduction in government that they asked for and they did not replace the SBT. Now they refuse to even negotiate with the Governor about a compromise.

In most cases, a business does not shift their tax burden to the consumer. It comes out of their profits. It is a bottom-line issue which is a part of the cost of doing business. The failure to replace the SBT has actually hurt businesses more than if it had been replaced. Businesses can not plan for, or project their costs of doing business in the upcoming year(s). Budgets can not be made, or can not be accurate or complete. This uncertainty, particularly for larger businesses is frightning. Some businesses have already left Michigan and cited this uncertainty as their reasoning.

[The Editor - Bridget]

Hello Wez, Ryan, Occasus, Anna, Rose and L.A.W. Readers,

Glad you all enjoyed Jeff's first entry as a guest writer on L.A.W.

We enjoyed reading his first article that got to the heart of some important discussions, issues and data dealing with our state of the state economic issue. We feel he will bring great thoughts to the table for our citizens to consider.

You all brought up interesting challenges to his first article and we are glad to see you are interested in the state outlook as well as that of G.R.

Continue the great dialogue and keep looking for future articles that will inform, challenge and question the status-quo.

Regards,

[Ryan]

Jeff,

Businesses are still paying the SBT (I'm still writing quarterly payments to the State - as is ever other business covered by the SBT). There's still time to replace it. Granholm's budget didn't propose a new business tax, either.

Reduced the gov't by $3 billion? Going from memory here, but I recall in looking over the state's budgets that Granholm inherited a budget of $38 billion and this year's proposal was pushing, what, $43, $44 billion thereabouts?

Maybe $43+ billion isn't enough; I truly don't know and I pretty sure no one else does either.

What I do know, however, is that $43 billion is bigger than $38 billion. I would hope you would agree.

Now, perhaps you can explain to me where this approx. $5 billion increase in spending has come from, and where has it gone? You would agree, that if the state was spending $38 billion and now proposes to spend $43-$45 that it has to appear somewhere in the budget, right?

Furthermore, you should tell me why (other than ideaology) or how you know for certain $43-$45 billion isn't enough?

Thank you,
Ryan

[Anna Lee]

Rose,

Your statement, "Corporations don't pay taxes they just pass it down" is not a new concept held by the general population.

But, it is not correct.

To the contrary, as I noted earlier, 97% of businesses in the U.S. are small businesses, meaning under 20 employees. Don't lump a corporation, the remaining 3% of businesses in the U.S. with everyone else.

I will be the first to assure you, when the time comes each month for bills to be paid, small businesses in this state do more than their fair share. Checks get cut to: the city, the state, the feds, health insurance premiums for employees, retirement programs for employees, upkeep/utilities/maintenance, supplies and employee payroll. Businesses also pay tax on building use, improvements, equipment and eventually profit once all this is factored in.

The cost to small businesses is not the same as large corporations.

A small business often has limited margins on it's goods and services so, if you pass the cost down too much, the people don't purchase your goods or use your services. Small businesses don't have the same bargaining power on expensive insurance plans (health, life and disability). Small businesses can't do things in bulk like large corporations can such as purchasing group retirement plans, buying goods and supplies, etc. And finally, small businesses have limited leverage when it comes to perks and laws with government officials because their numbers are so small (no tax abatement programs or ren-zone options or cool city perks etc). Thus, to stay ahead, smart businesses have the task of having to be technologically advanced, efficient and wise in order to stay ahead in these tough times. That's not always easy when extra taxes are lumped onto small businesses when they want to upgrade, improve or exand.

So, I would request that you reconsider your thoughts on this issue. I hope you will not be too quick to judge that the citizens are the only ones footing a tax bill. That they are the only ones tired of being taxed to death. The vast majority of businesses you see in every city and every county in this state more than pull their weight in this area too.

Take an extra look around when you drive home tonight. See all those small businesses that you pass everyday, but pay little attention to until you need them. Businesses like that corner party store, neighborhood gas station, local beauty parlor, shoe shop, supermarket, drug store, pizza shop, bakery, pub & diner, small manufacturing plant, the plumber, electrician, the heating/air conditioning service company, landscaper and every little business in between.

These businesses pay tax now and they'll pay tax in the future. They foot a personal tax bill and a business tax bill.

Small businesses are not passing it down. They are paying just like you and everyone else. And then some.

[Anna Lee]

Jeff,

I appreciate your feedback to my earlier response to you.

I'm glad to hear you are not anti-business.

Most businesses in this state are not opposed to paying their fair share of tax. They simply don't want to be gouged like anyone else does. Manufacturing as you noted earlier, has taken a tremendous blow over the years due to the SBT program. It has been nothing short of catastrophic to them. Manufacturing is not going away rather, it is in the process of a revolution much as the industrial and agricultural fields were decades back.

If Michigan wants to be a manufacturing pioneer again, they can. But, the leaders in Lansing MUST must work together and stop finger pointing.

As for the SBT, businesses continue to pay that tax through years end, it has not gone away yet. I'm confident Lansing will find some replacement before the revenue stream stops. The question, will they have the ability to make this state a leader in business development and growth or continue to drive businesses away due to the poor climate?

Time will tell.

I'm only scared that what they come up with will be worse than what they eliminated. Politicians have a poor track record of taking away one thing and putting something worse in it's place! I can see why businesses are nervous about that.

Good article, looking forward to future postings by you at The Local Area Watch.

[JWinston70]

While it is true that the SBT is currently in effect; it does not change the fact that businesses can not plan their future tax burden. I assume that Mike Rodgers' emphatic pledge of NO NEW TAXES OR REVENUE STREAMS would include an SBT replacement. If the Republican Senate and the Governor can not come to terms of the budget... How can we expect them to come to terms on a new business tax. Honestly... the Senate is unwilling to negotiate. Period! Why shoud the Governor develop a new business taxation, if the Senate will only play politics and stall.

[Tommy Times]

Ryan said that not taxing businesses is a 'straw man'. But I have a conservative friend who seriously proposes just that policy.

A tax on profits is less likely to be just passed through and be an indirect tax on the people. But a tax on profits also is likely to be very volatile. In the good years, the extra money is either spent, or tax rates are cut because the state is flush. In bad years, no one wants to increase taxes, so you end up in the situation we are in now.

[Ryan]

Tommy - the strawman comment I made was specific to my post, i.e. I didn't say businesses in Michigan shouldn't be taxed, so why Jeff made that comment in reply to me made no sense. There is no one magical tax regime suited for all-places at all-times.

Really, the biggest issue is to have marginal rates on individuals match marginal rates on business enities. Some states hardly tax either one directly (Texas comes to mind).

Since Michigan has a personal income tax, you have to tax business entities. Otherwise individuals would incorporate to dodge the tax.

And again, it is a myth that businesses can just pass on cost increases. Whether these increases are from taxes or steel prices or gas prices doesn't matter. Some industires have pricing power, most don't.

Profit is only one half of the most important metric in business. The most important being Return on Invested Capital (Profit/Invested Capital). If you have businesses barely making a return above their cost of capital, then you raise their costs, you make them less viable; even while they generate a 'profit'.

Jeff: you didn't answer any of my budget questions.

Ryan

[The Executive Director]

Hi, Jeff.

As the Executive Director I want to thank you for your first contribution to the Local Area Watch and doing an excellent job of stirring the pot from the get-go. I forward to featuring further articles from you.

Regards, Bill

[Barb VanPortfleet]

I check in at Local Area Watch from time to time and read your inaugural article. Am a lifelong conservative who has been wondering for ages why the diesel tax does not reflect the wear and tear that the transport industry inflicts on our infrastructure and who also believes the Chamber of Commerce promotes a destructive form of tunnel vision. And although I'm not a resident of G.R. proper, I am rooting for Mr. Jim Rinck as the next mayor of the fair city. Heartwell and Kimball have an attitude toward the 'burbs that keep many of us from venturing downtown or empathizing with their problems. Best of luck on the campaign. Now, off to contact my legislators!