The Headline in Sunday's Detroit Free Press says it all: "New Tax Shocks Business Owners."  The article goes on to point out the outrageous tax increases business owners are faced with due to the new Michigan Business Tax (MBT) that became effective January 1st.  What the article fails to tell us is how the state's new tax structure came to be the burgeoning behemoth of a bloated bureaucracy that it is today. The article points out that "as part of Michigan's bitter, drawn out debate last year on replacing the Single Business Tax (SBT), lawmakers in Lansing created the MBT to spread the tax burden more evenly.  Manufacturers got some relief, while service firms were expected to pay more."  This sounds like the nice bi-partisan sound bite it is intended to be, however it falls short of explaining what really happened in the state legislature. 

Early in 2007. Governor Granholm declared that a shortfall in projected state revenue represented a "crisis" for which there was only one answer: a tax increase.  (We now know that this alleged shortfall was a bit off; turns out there was actually a $350 million surplus in the state's coffers!) 

On the last day of the 2007 fiscal year the legislature had not yet passed a budget for FY 2008.  In the early hours of October 1, as state government was beginning the process of shutting down, Granholm finally got what she wanted, a $760 million income tax hike, and a 6% levy on selected services, most of which were business to business.  The service tax was projected to generate an additional $750 million. 

After passing the tax increase legislation, the 6% service tax was quickly seen to be a jobs killer that would adversely affect the big three Detroit automakers, so the service tax component was repealed 2 months later and replaced by a whopping 22%, $600 million surtax on the MBT. That's right, an additional penalty for the privilege of paying taxes! Instead of using the MBT for what it was intended, that being a jobs creator, and a tax burden reducer for business, it has become just another way for the state to glean more money from Michigan's business community. This should help explain the sticker shock businesses are feeling as Michigan firms calculate their estimated tax payments as required by law.

More than a few eyebrows were raised when the House Democrats used the new money to increase gross spending by some $900 million. Leaving us to ask, what happened to the "crisis?"

House Republicans fought this spending spree, uniting to oppose several budgets that are pumped up with the $1.5 billion in new taxes we are sending to Lansing.  No serious reforms were included in these budgets, which means no attempt was made to avoid spending the entire tax increase.  This matters because the House Fiscal Agency predicts a deficit next year of over $400 million.  If House Democrats are skipping spending reforms, spending every dollar AND facing a $400 million deficit next year, what comes next?  You guessed it, MORE TAXES.

One way to stop wasteful and unnecessary state government spending is to require that Lansing post its spending habits online.  House Democrats and Governor Granholm have repeatedly fought against House Republican proposals to do this.  What have they got to hide?

After pressuring House Democrats with a press conference that included Attorney General Mike Cox, House Republicans won a victory for tax payers everywhere by successfully amending several budgets to require that spending be reported in an easy to access online database.  Still, several Democrats voted AGAINST this important reform!  If this was in place last year, the legislature and Michigan taxpayers would have known the state was sitting on a $350 million surplus, at the same time that House Democrats forced $1.5 billion in new taxes on Michigan's struggling economy.  (If you are interested in an example of how this online database would work, check out the State of Missouri site: www.mapyourtaxes.mo.gov No wonder they're called the "Show Me" state.)

It is clear that taxes will be the primary issue for voters this year, yet again House Democrats have showed where they want to be: IN YOUR POCKETBOOK.