Monday, March 14, 2011

86% Tax Break for Corps. 31% Tax Increase for Middle Class.

Facing thirty years of failure to bring prosperity to the average American, Republicans are tripling down on trickle down economics. Michigan Governor Rick Snyder is handing out tax breaks to corporations, slashing them by 86%, while increasing income tax for low to middle income workers by as much as 31%.

Snyder's now taxing pensions, he's throwing out the state earned income tax credit for low wage earners, and he's throwing out tax credit for retirees.

As usual, this is going to hit low to middle wage earners the hardest.



Business taxes would be cut by 86 percent
from an estimated $2.1 billion in FY 2011 to
$292.7 million in FY 2013, the first full year of
the proposed tax changes.

[snip]

Taxes on individuals from the state income tax
would rise by $1.7 billion or nearly 31 percent,
from an estimated $5.75 billion in FY 2011 to
$7.5 billion in FY 2013, the first full year of
the tax changes.


You may not realize that Michigan has a flat income tax...otherwise known as a hyper-regressive tax. One of the most regressive tax systems in America, with some of the poorest individuals in Michigan paying as much as 9.8% of their income to the state and the richest individuals paying 5.4% of their income to the state. The poor are already taxed more than their fair share in this state...Snyder is seeing to it that it stays that way. And just for good measure he's going to increase it.

Now...you may ask..."But, Muskegon Critic...how is that possible?"

Because SALES tax is a tax that disproportionately affects the low income earners.

"But...Muskegon Critic...that doesn't count. You don't HAVE TO buy non-food items. And food items aren't taxed!"

Don't forget that things like soap, for example, comes with sales tax. Clothes. Baby diapers. Gasoline. Electricity. Medicine. Cars and transportation. Pots and pans. Property tax. Hair cuts. Clippers that are used to do hair cuts at home. Auto maintenance. Shoes. Water.

These aren't necessarily LUXURY items. Many of these are included among necessities, especially if you want to hold down a job: shelter, clothing, medicine, toiletries.

When sales tax to the state is calculated in...the poor to middle class pay a SIGNIFICANTLY larger percentage of their income to the state already than the richest people in the state.

That's what a flat tax does. It flips the tiered taxation system so that the poor, rather than the rich, pay a higher percentage of their income in taxes. That's why the earned income tax credit was so important.

But conservatives like Snyder apparently see low wage earning as something to be beaten out of people. Keep beating them in the face and kicking them in the ribs until they get tired of being poor. Maybe some day they'll get tired of it.


3 comments:

Tracy said...

At least for once we have a tax system that taxes everybody. I' tired of paying taxes so others can sit around and do nothing. Time to get back to work, and have everyone pay taxes and ten a lot of our issues will go away. Why not have a flat tax on everyone of 25%?

Muskegon Critic said...

I definitely agree that the best way for both of us to reach our objective is to have an economy that creates jobs and pays a livable wage.

But a Flat Tax is just an upside down graduated tax when all tax burdens are taken into account, with the lower income folks paying a higher percentage of their income, and the higher income people paying a lower percentage of their income.

In Michigan everybody pays a 4.35% income tax.

But when sales tax is added in as part of the tax burden, you start seeing a huge increase in tax burden for lower income people.

Why?

Because middle class person's baby poops as much as a rich person's baby, and the rich family is paying the same amount of sales tax on baby diapers as the middle class family.

When sales tax for necessities are included in the tax burden -- gas, electricity, clothes, toiletries, medicine, auto repairs -- Middle Class and poor folks in Michigan pay 8% to 10% of their income to Michigan....while a millionaire pays just 5.4% of their income to the state.

The flat tax means that Rich people pay a smaller percentage of their income and the middle class pay more....

We fight so hard to make sure the rich get a fair shake and don't pay a higher percentage that we ignore when we ourselves suffer the same fate.

Mr. R said...

Tracy should understand that if the unemployment rate is too low the big business sends sob stories to the Fed about how they are forced to hire disabled people, about how they have to send buses to get the workers to work.

That's what happened in the late 1990s when Alan Greenspan allowed the unemployment rate to dip under the NAIRU (Non-Accelerating Inflation Rate of Unemployment), with the Asian Crisis and the implosion of a hedge fund practically forcing them to loosen the reins with unemployment lowered to a 3.8% causing much wailing and gnashing of teeth in the Chambers of Commerce. Greenspan relented and hiked the rates and unemployment was restored to higher levels.

Now Greenspan's sin has been identified as being too soft on workers and the NAIRU has been identified as being 8% (it was 6% when Greenspan's attempts to brake the recovery failed and people saw that there was no accelerating inflation, after which he changed his mind and let unemployment go down further, and at one point was forced to lower rates further because of the government shutdown) so big business has no fear of such horrors being repeated.