Tuesday, June 25, 2019

New proposal: Raise taxes on corporations, heavy trucks for road repairs

Posted By on Tue, Jun 25, 2019 at 11:02 AM

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In March, Michigan Gov. Gretchen Whitmer proposed a regressive .45-cent-per-gallon gas tax that would raise $2.1 billion for the state's much needed road repairs.

We pointed out that the tax would hit the state’s poorest residents the hardest, and the proposal comes after Michigan cut business taxes by about $2 billion over the last eight years under the GOP and Rick-Snyder-led government.

Thus, requiring corporations to once again pay their fair share seems like a better alternative than asking all motorists regardless of income to cover the gap.

Last week, state House Democrats proposed doing just that by boosting the state's corporate income tax from 6 percent to 8.5 percent while raising taxes on flow-through entities, which could generate $800 million annually.

The Associated Press reports that an additional vehicle-miles-traveled tax on the two heaviest classes of trucks would generate $390 million, while the new bridge tolls would raise about $50 million.

The logic is pretty simple — heavy trucks do the most damage to the roads, and corporate tax rates are absurdly low, so it's time for them to kick in some more money.

The proposal is relatively modest when one considers that Michigan businesses collectively paid $0 in taxes in 2016 and little in each year since. According to a Bridge analysis, business taxes represented 12.4 of the state budget in 2012, and now represent 1.9 percent. That amounts to a loss of about $2 billion in revenue.

After Whitmer floated her proposal, the state GOP countered with an awful plan that would divert about $850 million from schools and municipalities, and didn't include any new taxes.

But State House Minority Floor Leader Yousef Rabhi (D-Ann Arbor) says a fix requires new revenue.

"I believe that if you break it, you need to pay to fix it. So heavy trucks need to pay their fair share," he says. "Corporate taxes are at an all-time low, while the rest of us foot the bill. It’s time they put some skin in the game to repair the infrastructure their economic success depends on."

Republicans, however, have been reliably opposed to the idea of raising taxes on anyone except the elderly, poor, or middle class. Their standard arguments claim that higher taxes kill jobs, and the state's economy can only thrive when businesses pay extraordinarily low taxes, even if that means sacrificing the roads.

But Rabhi says the situation is preventing the economy from reaching its full potential.

“Bad roads kill jobs. Crumbling bridges kill jobs. Bad schools kills jobs. Our economy depends on strong public infrastructure," he says. "We are not making those investments now as a state, which has dramatically stunted our economic growth potential."

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