The Michigan Senate on Thursday voted to give businesses a tax credit equal to the expenses they incurred to comply with the short-lived tax on services.
Democrats say the tax credit would be fiscally irresponsible.
But Republicans who hold the majority in the Senate say the legislation is needed because some businesses unfairly incurred costs getting ready for the new tax, which took effect for less than 24 hours before lawmakers repealed it Dec. 1. The service tax was passed in early October as part of a package of cuts and tax increases to deal with a budget shortfall.
It's unclear how much businesses paid over the two-month period to comply with the tax. But the nonpartisan Senate Fiscal Agency estimates the proposed tax credit could cost state government an unknown and potentially significant amount.
Apparently they are trying to amend the income tax as well, creating a potential double credit. Talk about overkill. Senator Switalski tried to sweet talk Nancy Cassis off the ledge.
If I could read from the Senate Fiscal analysis it says, “the bill would also allow non-business tax payers under the individual income tax to claim the credit. The bill does not define what expenses would be eligible for inclusion under the credit or how a taxpayer should determine whether an expense was incurred to comply with the former Section 3d of the Use Tax Act. As a result, taxpayers that were not charged with collecting the tax, but may have had expenses determining whether their purchases would be subject to tax or how to account for such taxes in the course of their activities also would be able to claim the credit. The additional revenue loss under the bill from these taxpayers is also unknown and likely significant.” It goes on to say that, “For these firms,” it’s talking about some business firms now, “because neither bill would prevent a taxpayer from claiming a credit on both returned—the MBT and the income tax—taxpayers would be eligible to claim a credit twice for the same expenses if both bills were enacted.”
Well, you know I have to comment on the remarks earlier by my very good friend, the Senator from Novi, who I have great affection for and have publicly declared that affection on many occasions, but she has certainly provided us with a new definition of minimal because it is now $900.00 million as minimal. I just want to say that, Mr. President, I myself incurred some expenses getting ready for the sales tax and my expenses were well below the minimal amount of $900 million. In fact, my expenses were minuscule and even if I can claim them twice and double them, they will still be a very small amount. So it’s with some misgivings that I actually rise up in opposition of this bill because I could financially benefit from its passage. But, I do have to say that it again is estimated at $100 million on this bill and it would not be fiscally responsible after what we’ve been through in the past year to pass this bill. I urge all members to vote against it.
No dice. They jumped. Passed both bills, insisting on the fiscal irresponsibility that got us here in the first place, and no answer on how we would go about paying for the hole they would create. So much for the cooperation and communication that Mike Bishop promised.
House Republicans want to play too- over the jump...
Not to be outdone, the House Republicans got in the "who can blow the biggest hole in the budget" act this week as well, introducing legislation that would repeal the surcharge on the MBT...
A bill introduced Wednesday in the state House would repeal the Michigan Business Tax surcharge passed late last year. The bill was introduced by Dan Acciavatti, a Republican from Macomb County's Chesterfield Township. He says the tax increase was not needed.
Democrats who control the House likely will oppose the bill. Eliminating the surcharge without a replacement would cost the state roughly $500 million in revenue this fiscal year. House Democrats say that would jeopardize money for services such as education, health care and public safety.
This comes on top of the House Republicans throwing a fit about returning the $353 million surplus that was brought about by savings and healthier than expected revenue on lottery and income tax. They complain when we spend money (even as they put their name on the check), they complain when we save money. Guess they just like to complain, period.
"This is blood money from people who are losing homes to foreclosure and businesses that are having to leave this state," DeRoche said at a news conference.
Liz Boyd, spokeswoman for Granholm, said DeRoche is engaging in name-calling and political gamesmanship, and that the surplus is the result of prudent management.
"We're far from being out of the woods fiscally," Boyd said. "We'll be very cautious in our spending. We're not afraid to make cuts, but we want to avoid more massive cuts to public safety health and education."
State economists are expected today to predict another tight year for state finances, though not as bleak as 2007.
DeRoche said he would propose some $600 million in budget cuts for the current fiscal year.
You do that Craig. Waste more of the taxpayers time on legislaltion that will go nowhere.
Better yet, just stop. Now. All of you. The new budget is on its way, and you can insist of being irresponsible then. Please, just let this one go.