In 2011, Rick Snyder and Michigan's Republican House and Senate eliminated the Michigan Business Tax and replaced it with a 6% flat tax, costing the state $1.7 billion per year in revenue. To partially make up for this, they eliminated most tax credits and deductions for poor residents, raising $900 million per year. The rest of the loss was supposed to be made up for by all the new businesses that would move to Michigan (since it was now "business-friendly" tax-wise) and the flurry of new jobs that would result. Well, obviously that didn't happen, for the same reason that the "trickle-down" economics theory has been debunked for decades -- taking money from the poor and giving it to the wealthy has never created jobs. Ever. Still, that's what "we" voted for, and that's what we got.
Today, it's been announced that to fix the roads (a real problem that was made worse by the dramatic business tax reductions), our Republican-dominated state Senate and House are proposing to raise Michigan's sales tax from 6% to 7% (or at least put it on the ballot without a backup plan.) Sales taxes, of course, are often regressive, in that they place a much greater tax burden on the poor and working class than on the wealthy, especially in a state like ours which doesn't provide sales tax exemptions for basic needs such as clothing. The percentage of income one pays in sales taxes is six times greater for the poor than for the rich, which is why Michigan's wealthy have such a dramatically lower total tax burden than the rest of the state. Higher income taxes might make up the difference in most states with a similar sales tax, but we're also one of only six states with a regressive flat income tax as well, meaning the total state tax burden of the wealthy (sales taxes, income taxes, property taxes, etc.) is still far less than the average resident.
In other words, raising the sales tax from 6% to 7% is placing the whole burden of fixing the roads on the backs of those with the least money to give, keeping the ultra-wealthy and business owners happily paying some of the lowest tax rates in generations. Worse, another increase in the state sales tax will send even more middle class people to buying everything online, instead of at their local stores, unless Michigan starts demanding that online retailers collect state taxes too (again, not likely given the 2 to 1 breakdown of Republicans to Democrats in our state government.) Unfortunately, if we don't vote for the increase, the roads will continue to crumble, and its possible that an even worse proposal might go through (like the recent House proposal to literally snatch 100% of the needed $1+ billion from schools and local municipalities, who are struggling).
I saw a comment today that said our "one tough nerd" must be bad at math. I absolutely disagree. Wealthy people are very good at math. They know this math takes money from poor people and middle class people and gives it to the rich. That's a feature, not a bug. It's the whole point. The Republican party is deeply committed to this "reverse Robin Hood" mentality, and sees it as a moral imperative -- taxes are something poor people pay, and once you've achieved "success" (or, more likely, were born into a wealthy family) you don't have to pay taxes anymore. You're better than that. You're above such plebeian nonsense. There are loopholes for you, after all. It's your money, you earned it, and you're going to pay your accountants to find the best tax-free investments and offshore tax havens available. Besides, who needs roads when you can take a private jet, amiright? And, Republicans convince a heck of a lot of poor and middle class people to vote for them on the insidious promise that "with these policies, someday YOU TOO will be rich."
In the 1940s, the top marginal tax rate averaged 85%. We won a World War. In the 1950s, the top marginal rate was raised to 90%. We built a highway system. In the 1960s and 1970s, the top marginal tax rate was still 70%. We sent men to the moon. It's amazing what you can do with a properly-funded government. After all, we could never do any of those things today. We can barely "win" a war against a third-world country. We can't keep our roads and bridges from crumbling. We can't even afford to go back to the moon, even in an age where the smartphone in my pocket is 1,000 times more powerful than the computers that powered Apollo. At some point we need to, as a nation, remember that governments can do great things if they have the money and the will to do so. Capitalism really can provide for the common good if coupled with the type of progressive tax structure that we had in place for much of the twentieth century. But when our elected representatives are disproportionately in the upper levels of the American wealthy, surrounded by lobbyists and corporations representing the upper upper UPPER levels of the American wealthy, why should we be surprised that they consistently vote to shift the tax burdens away from themselves and toward those who don't have a voice?
Look. I don't hate the private sector, the free market, or building wealth. I don't "hate" Republicans, either - I'm not a U of M professor, after all! As many of you know, I'm actually a two-time Bush voter and small business owner. But when the Republican party has lost ME, which they have, there's a problem. And the problem is that we are a nation which needs infrastructure, schools, health care, defense, and a whole host of other imperatives that do, in fact, have a cost.
Right now, I'm living in a state whose roads and bridges are crumbling into dust, crippling our ability to compete. Raising the sales tax will, I suppose, fix the roads, and I'm sure l will grudgingly vote for the increase when it's on the ballot. But is this really the best solution our elected officials could come up with? Was there really no other option that shifted the burden in a fairer way? Based on who we keep electing to represent us, and who they're beholden to, I guess we'll never know.