State Dems try to jump-start economy with student tax credits

You have to give Curtis Hertel Jr., and Andy Schor credit. Their hearts are in the right place, and they want to create jobs to keep educated young people from getting the hell out of Michigan. Trouble is, they are "practical" politicians.

Both are from the Lansing area. Hertel is a state senator, Schor a state representative. Both are Democrats, which means in today's world they have no power, not on their own.

And they know how Republicans think. Tell a GOP legislator that his wife has cancer, and his first instinct would probably be to offer her a tax credit.

Tax cuts and credits are the only sort of therapy they understand, since anything real, like asking the rich to pay as much for public services as the poor do, say, would be some kind of sacrilegious communistic socialism, and therefore bad.

Michigan doesn't have nearly enough jobs to keep the best and the brightest here these days. Gov. Rick Snyder came into office with a vision, which was that he'd give corporations huge tax cuts and they would gratefully create oodles of employment.

Well, they were grateful ... for the money, but while employment has slowly risen, there's no sign the Snyder cuts did anything to stimulate job growth in this state. So more than a third of new Michigan college graduates take off for places like Chicago or Colorado.

Hertel and Schor have a plan, however, one they think they might get Republicans to buy: Give them new college graduates an income tax credit!

Yup. We no longer believe in doing much to help students get through college these days, and they mostly come out saddled with debt — more than $29,000, on average. (It's the stuff dreams are made of.)

Schor and Hertel want to offer these kids an "income tax credit equal to 50 percent of the amount of qualified student loan payments made during a single tax year."

Well, that's clear enough. That is, clearly impossible to understand. How much money would that be? Schor said it would amount to "$1,500 or so for five years," which he thought would show new college graduates that "we are investing in them to help make Michigan a great place for the future."

There's one tiny problem, however: People have a hard time using income tax credits when they don't have an income.

Last year, Bobby McKenzie, who had been working for the U.S. State Department in Washington D.C., came home to run for Congress. Before he lost, I asked him why.

McKenzie, who is from Dearborn Heights, told me "My brother graduated from college and looked for a job in Michigan for six months." Then he went to Chicago, and found a good job in his field in a week. His brother wanted to help change that.

So do Schor and Hertel. Unfortunately, it's hard to see how their bill, HB 4118, would create any jobs at all.

What if it had been law when the younger McKenzie was offered work? Do you suppose he would have told his new employer, "Thanks, but no thanks. I know you offered me a good-paying job in my field, but I have to stay in Michigan. They're giving me an income tax credit!"

Speaking of the income tax, did you know that the Michigan Constitution outlawed any kind of graduated state income tax? Yup, the people who wrote it in 1961-62 wanted to make sure the rich didn't pay more than the poor.

You will naturally be surprised (not) to learn that two-thirds of the delegates were Republicans. Thanks to their fine work, Michigan now levies the same 4.25 percent tax on everyone: Matty Moroun, middle-class me, and the single mother working for minimum wage in a crummy factory.

Actually, they don't pay the same; the poor pay a much higher percentage of their income in taxes, thanks to regressive sales, property, and other taxes designed to soak the poor.

But now somebody is finally trying to do something about this: state Rep. Jim Townsend, a Democrat from Royal Oak. "Why is it that an impoverished family living in Flint making $10,000 a year ... contribute 9.2 percent of their hard-earned money [in taxes] each year, while a billionaire like Matty Moroun contributes less than 5 percent?" Townsend asked in a column in the Detroit Free Press recently.

He knows the answer, of course: The Golden Rule. As in: He who has the gold makes the rules. Townsend also has a solution: Amend our unjust constitution to allow a graduated income tax, one in which the very rich would pay higher rates.

Once, in a saner time, that would have seemed common sense. Rich taxpayers paid far higher rates back in the 1950s and '60s, and they stayed plenty rich.

But we live in an era of right-wing nuttiness. Townsend is scarcely a socialist. Before serving in the legislature, he was a brand manager for Ford, and ran his own strategic marketing and consulting firm. He does, however, believe in fairness.

And Michigan is one of the nation's least fair states. Businesses contribute a smaller share of the tax revenue here than in all but two other states. There is vast unfairness in personal tax equality, as well, and that's getting worse.

So Townsend will soon introduce both a proposed constitutional amendment to allow a graduated tax — and a separate bill to set what those tax rates would be.

Townsend knows this is pissing into a hurricane: Republicans have an iron grip on the legislature. They probably won't even let his bills come up for a vote. He will have to begin the process of collecting signatures to get them on the ballot. That will be hard. But Jim Townsend thinks Democrats need to go on record as to what they stand for, sort of like party platforms in the old days.

Who knows?

If he can somehow make voters see how much better they and the state would be with a graduated tax, he might even win.

And, except for the super-rich, so would we.

Jack Lessenberry is head of the journalism program at Wayne State University and the senior political analyst for Michigan Public Radio.
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