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Report Ties MI Road Funding Gridlock to Business Tax Cuts

A new report connects Michigan road woes and other economic troubles to business tax cuts. Credit: DodgertonSkillhause/Morguefile
A new report connects Michigan road woes and other economic troubles to business tax cuts. Credit: DodgertonSkillhause/Morguefile
November 4, 2015

LANSING, Mich. - As state legislators move to approve a plan to end the gridlock over road funding, a new report points to business tax cuts as the source of the funding debacle.

According to the findings from the Michigan League for Public Policy, the state budget and individual taxpayers suffered because of the $1.6 billion tax cuts four years ago. Gilda Jacobs, the league's chief executive, said it resulted in less money for roads, cuts to schools and higher taxes - without boosting the economy.

"What happened back in 2011 really didn't provide enough resources to make investments for things that Michigan residents and businesses value - for example, roads - in order to create a Michigan that works for everybody."

According to the findings, private job growth had its biggest increase in 2011, but growth slowed after the tax cuts. Nearly one in six Michiganders, including one in four children, are living in poverty. On Tuesday, lawmakers moved to pass a proposal that would feature $600 million in unspecified future budget cuts and an income-tax rollback.

Jacobs said the plan won't fix the roads and perpetuates the problem instead of offering solutions. She suggested that lawmakers look at the bigger picture and create a fairer income-tax structure, "one that would cut taxes on most individual taxpayers, still bring in more revenue, and then diversify the sales tax base. There's been some reluctancy to do that, but you can't always be taking the same pie and dividing it up for all of the needs."

Jacobs added that Michigan needs to take a page from other states in the region that are better off - and where business taxes are higher.

"Being a high-tax state, like a state like Minnesota, doesn't mean that you're not going to have job growth," she said, "so what we're really seeing is that taxes may not have anything to do with unemployment and the kind of things that are thrown out in terms of Michigan's recovery."

The report is online at mlpp.org.

Mary Kuhlman, Public News Service - MI