Tax cuts for wealthy don’t belong on Michigan’s to-do list

My husband and I are in the process of fixing up our home.

We’re fortunate enough to have a solid house with good bones, but there’s a lot that needs our attention, and it’s not usually the fun “Pinterest-worthy” updates.

In a home that’s over 100 years old, certain things quickly rise to the top of the to-do list. When the boiler goes out in November, it becomes a priority. Electrical issues, plumbing leaks, and a chimney repair all made it on to our list.

The point is, the structural integrity of our home would crumble if we opted to put our money and time into cosmetic touches like new furnishings and paint instead of the more pressing concerns.

With the drastic personal income tax cut that passed the Michigan House on Tuesday, I couldn’t help but draw some parallels to my own house — and yours.

It’s true that Michigan is in a strong economic position, largely because of federal recovery dollars.

But we’re still dealing with some dire emergencies in our state.

Close to 38% of households struggle to afford basic necessities like child care, food, and housing statewide. The median income for Alpena County residents is $43,363, and the county poverty rate is 14%. And those numbers are both worse in Alcona and Montmorency counties.

Legislative Republicans’ proposed tax cut will do very little — in some cases nothing — to provide some breathing room for struggling residents in Northeast Michigan and around the state. Instead, it will primarily benefit the wealthy.

The proposed plan to cut the personal income tax rate to 3.9% means that the lowest 20% of Michigan earners, making less than $23,000, would see just $12 in savings. That’s only enough to pay for a pack of lightbulbs. The middle 20% of earners, making between $41,000 and $70,000, will receive an average tax cut of $92. Based on the median incomes, that range covers the majority of Alpena-area residents — and it means you’ll get enough money back to buy a new sink (as long as you have economical taste).

Meanwhile, the highest 1% of earners in Michigan would get $4,901. That’s enough money for a roundtrip flight to Paris to consult with an interior designer.

Hopefully, that helps that inequitable tax cut hit home. Simply put, the proposal stands to increase racial, economic, and geographic disparities. And it will cost our state billions, jeopardizing funding for a strong K-12 education system, affordable housing, clean water, safe roads, and more.

According to analysis by the nonpartisan House Fiscal Agency, Senate Bill 768 would reduce available revenue for the budget negotiations by $3.1 billion in the 2023 state budget and cost the state $2.4 billion the following year — and likely each year going forward. Those costs will require the state to either cut important public services or risk losing vital federal aid provided under the American Rescue Plan Act, dollars intended to help struggling workers, families, businesses and communities recover from the economic impacts of the pandemic.

Those tax cuts for the wealthy are being pitched as beneficial to all, but that’s simply not the case. That tax cut is putting politics before policy and shortsighted cuts before smart, long-term investments.

When it comes down to it, it’s really just the equivalent of me hanging new drapes and pretending the boiler works.

Let’s target those unprecedented funds where they’ll make the most improvements — let’s invest in rebuilding the structural integrity of our state instead of spending more on the folks who have the most already.

Monique Stanton is president and CEO of the Michigan League for Public Policy.


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