With Michigan’s economy in trouble, legislators and residents alike are desperate for solutions. A new legislative initiative sponsored by Oakland County Executive L. Brooks Patterson claims to offer help. The initiative, if approved by voters, would force the state Legislature to vote on whether to repeal Michigan’s Single Business Tax. If approved, Gov. Jennifer Granholm couldn’t veto the measure. Patterson has campaigned for signatures to place the initiative on the November ballot. But while Michigan’s economy needs help and the SBT needs reform, a special-interest-funded sprint around the problem isn’t the way to do it.
Granholm has opposed cutting the SBT without a replacement of the revenue – the tax brings in almost a quarter of the state’s general fund. Pro-business state Senate Majority Leader Ken Sikkema (R-Wyoming) also opposes Patterson’s initiative, expressing concern about altering the tax system because of the fiscal problems the state already faces. Michigan already has a budget crisis, partly due to former Republican Gov. John Engler’s reckless tax cuts. According to Sikkema’s spokesman, “If people think we’ve been cutting the budget a lot, they ain’t seen nothing yet if this passes.”
The SBT was initially created as a single solution to a complex mess of state taxes. The tax is based on payroll and additional company assets, not earnings, which means businesses are forced to pay even when unprofitable, and creating new jobs increases a business’s tax liability.
Eliminating the tax, however, would cost the state $1.8 billion a year. Legislators would then face making up the difference by raising other taxes during an election year – an unlikely proposition that could mean more cuts to funding for universities and social programs.
Patterson would like to frame his initiative as people-powered, but there are no limits on individual or corporate donations to a ballot committee. That’s right – wealthy donors and big corporations are exempt from those pesky campaign finance regulations that typically get in your way whenever you try to buy yourself a law.
Patterson would also like to claim that he’s forcing legislators to confront an issue they would rather shirk. But is initiative does just the opposite. If voters approve the initiative, legislators can claim they were overridden and blame the petition for the resulting budget shortfall. Tellingly, Patterson has hired the same firm, National Petition Management, that sponsors of the Michigan Civil Rights Initiative used to get signatures that many later said had been obtained fraudulently. “Sign to support civil rights, or tax cuts, and don’t mind the details” – that’s all in a day’s work if you’re paid per signature.
The reason we have legislators is so that they can wrangle with the eye-wateringly boring details of things like tax law and state budgeting. Petition initiatives may look very democratic at first glance, but they can be easily twisted by special interests to take advantage of voters’ lack of information and rush sloppy proposals into law. The SBT does need to be reformed, but the last thing Michigan needs is another quick fix that turns into a long-term economic burden.