A roundup of recent Michigan newspaper editorials
Detroit News. March 5, 2019
Whitmer slumps back towards Lost Decade
Gov. Gretchen Whitmer took a step back toward Michigan’s Lost Decade in her first budget proposal, seeking to alter one of the key tax reforms that helped make the state competitive for jobs and investment.
The governor proposes extending the 6 percent corporate income tax on most privately owned businesses. The 100,000 S-Corps, limited liability corporations and partnerships she is targeting include businesses such as shop owners, professional service providers and small factory operators.
Former Gov. Rick Snyder exempted those businesses from the corporate income tax because they already pay the state’s 4.25 percent income tax on every dime they earn.
So they were being taxed twice on the same income. That made the Michigan Business Tax, which replaced the equally onerous Single Business Tax, one of the most complex and unfair tax codes in the nation.
It’s a key reason Michigan languished in a single state recession for the 10 years leading up to Snyder’s election in 2010, unable to respond to the shrinking of the automotive industry.
The governor’s budget team insists Whitmer’s plan is not double taxation because business owners would get a credit on their state personal income taxes to help offset the higher tax rate they’ll be paying.
Extending the tax to private companies is estimated to raise $280 million in new revenue. Budget officials say additional federal tax credits would reduce the impact on business owners to $190 million.
Patrick Anderson of Anderson Economic Group isn’t buying the math.
“It’s still double taxation,” he says. “For some taxpayers, sometimes and subject to considerable limitations, some portion of state and local taxes are deductible from their federal taxes. But the majority of taxpayers don’t even attempt to deduct state and local taxes through itemizing.
“I disagree that there’s anything close to the $190 million that will come back in federal tax credits. Maybe 10 percent, if that.”
Anderson says the complex tax revision, “suggests we’ve learned nothing from the Lost Decade.”
Michigan’s recovery from that era of dismal tax and regulatory policies has been long and arduous, but last year for the first time it cracked into the Top 10 states for an attractive business tax climate.
That translates to more attention from those seeking to invest and create jobs here, and the retention and expansion of existing businesses.
Hiking taxes on business and making the code more complicated drives out those businesses that have the ability to set up shop across state lines, and keeps those that don’t from growing.
On other tax matters, Whitmer is offering a mixed bag.
While the proposed 45 cents per gallon hike in fuel taxes will be hard for residents to swallow, Michigan’s horrid roads require that level of investment. Those who use the roads should pay to fix them. The proposal actually raises short of the touted $2.5 billion for roads because $600 million in General Fund dollars that had been going to road work will be returned to education accounts. But it does keep the funding lines clean.
We also support Whitmer’s proposed expansion of the Earned Income Tax Credit, which was curtailed by Snyder. The credits provide an incentive for low income residents to join the workforce. Michigan’s economy is starved for workers — thanks largely to the tax reforms Whitmer now hopes to undo.
The new governor also seeks to eliminate the state income tax on public pensions that Snyder imposed in the name of fairness. He was correct that pensioners should not be given special treatment at the expense of those who fund their retirements with personal savings, 401(k) accounts or part-time jobs.
But overwhelming the rest of her budget plan is the nightmare of slumping back toward anti-business taxation. It helped destroy Michigan’s economy once before, and would do so again if allowed.
The Republican-led Legislature worked hard with Snyder to craft a competitive business environment. Now, it must fight to keep it.
The Mining Journal. March 6, 2019
Forecasting tool for cold-weather shipping a good project
Research being conducted now should provide both the U.S. Coast Guard and the commercial shipping industry with a valuable new tool in navigating the Great Lakes during cold-weather months.
University of Michigan researchers, using a $10,000 grant from the Graham Sustainability Institute, are in the process of developing an ice forecasting system that will greatly aid winter sailing. And why not? As much as 20 percent of Great Lakes cargo moves in the winter.
Time is money, literally, in Great Lakes shipping. Ships that are stuck in ice aren’t generating revenue for either its owner or whomever has leased cargo space aboard, never mind the potential for damage. Such was the case four years ago when the Arthur M. Anderson, loaded with iron ore on a passage across Lake Erie, got stuck in ice for five days near Conneaut, Ohio.
“It couldn’t get in to Conneaut and then it couldn’t get out, and it had a full load,” Tom Rayburn, director of Environmental & Regulatory Affairs of the Lake Carriers’ Association in Cleveland, said for a story that appeared in The Mining Journal. The trade association promotes the interests of operators of cargo vessels on the Great Lakes.
Using existing data streams and forecasting models, look for an experimental version to be available by 2020 and a final product by 2021. A wide variety of stakeholders will be involved in pulling everything together.
Unlike some governmental efforts that produce studies and processes that are all but ignored once complete, we believe this effort will bear usable fruit, and within a reasonable amount of time and at a reasonable cost. We’ll look forward to the results.
Traverse City Record-Eagle. March 9, 2019
Trademark tussle ends between M-22, state
The M-22 litigation saga is just like the road itself, bendy, fascinating views, and plenty of twists and turns.
On the one hand we have local boys done good with Keegan and Matt Myers who were enterprising enough to get a federal trademark on the state’s M-22 road sign.
They got the trademark in 2007, and put M-22 on T-shirts and bumper stickers as their lifestyle brand.
According to federal trademark law, five years of consecutive use makes the trademark “incontestable.”
Then the cease and desist letters started arriving on the doorsteps of other businesses that used M-22 signs, and those that used other M-road signs — like M-25, M-26, M-28, M-37 and M-119 — to sell things.
Then Attorney General Bill Schuette took up the sword on behalf of the state.
But his case had troubles — the state couldn’t prove damages, other people had trademarked road signs to sell things, like Route 66, and the Myers’ federal copyright had strength and precedent on its side.
Also, current Attorney General Dana Nessel didn’t want anything to do with it, and dropped it.
So where does this leave us?
Well, if you happen to live or do business on M-22, you are allowed to use M-22 as an address to denote your location.
Also, the state can continue use of its sign, but it is not allowed to sue the company again.
Incidentally, taxpayers paid for the road, and the signs that identify it. Taxpayers also paid for the seven years of legal wrangling to get back to zero.
What a long, strange road it is.