Single Business Tax

I wrote an email to my State Rep Robert Gosselin about our County Executive L Brooks Patterson's proposal to eliminate Michigan's Single Business Tax. This elimination would cut $2 Billion from our state's revenue. As a State Representative, Mr. Gosselin would eventually cast a vote on the proposal.

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Mr. Wong,

Thank you for your letter. I always enjoy when I get updates from my constituents, especially those who live abroad because they can give some interesting ideas/insights from their experience. Citizen input is valuble to me as a legislator; it helps me to better express your ideas and desires at the Capitol. Thank you for the opportunity to explain why I feel that the Single Business Tax needs to be abolished in its current form.

Enacted a little over 30 years ago, the Single Business Tax (SBT) is a payroll tax- meaning the formula for taxation is based on both how much an employer pays the workers in salary and number of workers. Businesses that expand ( hire new workers ) or pay their people a good wage are thus penalized. It is unique to Michigan. It is my belief that if no other state has seen fit to impose this method of taxation on their businesses (which give jobs to the citizens and enriches the state with a variety of other tax revenue) than perhaps we need to look at a different tax method which is more competitive--and in-line with other states'. I serve as the Chair of Employment Relations, Training and Safety, and have been told repeatedly by Michigan employers who testify before my committee that our state has a bad reputation for being a costly place to do business. I have included an article with a chart which shows how we stack up against other states. In order to shake this reputation and open our state more businesses, the least we can do is to eliminate the SBT and combine that with efficiencies in government spending. In doing so, our state government would give the proper signals to the rest of the United States that it is embracing modern methods of taxation and encouraging prudent spending on core government functions. I have heard many special interest groups in Lansing mention that there's no way the state can do without the $1.855 billion the SBT brings in. - But I believe that this line of reasoning shows a lack of creative thinking and an unwillingness to deal honestly with the challenges of globalization and heavy interstate competition.

Lately, I've been intrigued by the possibility of paying for the elimination of the SBT with a series of smart spending initiatives. State government would achieve $1.855 billion in savings with little heavy lifting. Much of the savings would come from adopting a more business-like model for government operations and government employee fringe benefits, and focusing dollars on core government functions.

I don't think most people would miss the beaurocratic environment in Lansing should a change in the priorities of government spending take place. If the elimination of the SBT were "paid for" with intelligent spending, Michigan residents might notice something else instead: Michigan’s economy would start growing, property values would increase, and jobs and income would start to rise.

Below are some articles on the topic, I think you will find them interesting: http://www.detnews.com/apps/pbcs.dll/article?AID=/20060302/OPINION01/603020319&SearchID=73237343486698 and http://www.detnews.com/apps/pbcs.dll/article?AID=/20060301/METRO02/603010358&SearchID=73237343650834

Let me know if they don't open for you, I will send them pasted into an email. Thank you for your letter and keep up the great work as an ambassador for Michigan.

Sincerely,

Robert Gosselin State Representative, 41st House District Troy - Clawson


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You know, I hate to be labeled as someone addicted to tax revenue like a heroin addict, as Mr. Patterson likes to paint; But I hate to think of Michigan as anti-small-business. Michigan's reliance upon a certain big 3 has been failing our workers. What do you think? Where can we go?

(One more thing, Mr. Gosselin's use of "smart spending" must be newest euphemism in the Right's Playbook of Spin for budget gutting)