Monday, August 17, 2009

SBAM on Taxes & Spending

Instead of pushing for a "Fair Tax" Amendment in the next election, the state legislators need to do the same as any company is now being forced to do. Cut spending overhead. Where is the greatest expense? Employee Benefits!!! The Auto Worker Unions have had to concede that the cost of Health and Retirement had become Unsustainable. Well, so has the Employee Benefits of the State and Local Employees here in Michigan. This is the first place that Michigan Legislators should be looking to cup spending.

The second place is cutting the waist out of the many programs and yes, it means cutting government jobs. There will be plenty of Private Small Business ready to hire if Michigan's Legislators simply start using a little common sense.


Bottom line: protecting small business from high taxes means that those small businesses will have more money to grow their businesses, hire more employees, and pay good wages.

The surcharge placed on the Michigan Business Tax (MBT) must be repealed. The surcharge is a major obstacle that stands in the way of job growth. In the absence of an outright repeal, immediate action should be given to reducing the rate until it is repealed. Bottom line: protecting small business from high taxes means that those small businesses will have more money to grow their businesses, hire more employees, and pay good wages.

No new tax breaks for specific companies or industries should be signed into law until the MBT surcharge has been repealed. The current policy of giving tax breaks to specific companies or industries is a major impediment to our goal of broad tax relief for job providers. Broad tax relief, such as the repeal of the surcharge, will have the greatest impact on job creation for Michigan. Until we are able to provide this relief, we should stop issuing credits to the special few.

We must cut government spending. The current level of state spending is simply more than taxpayers can afford. Last year’s budget included a 42 percent tax increase on job providers – the last thing Michigan needed in this poor economy. There are currently many government reform proposals that deserve support. Examples include corrections reform such as detailed by Public Sector Consultants (among others) as well as state employee benefit reform. SBAM has shown how hundreds of millions of dollars could be saved if state employees received health benefits similar to what most small business employees receive.

SBAM stands ready to strongly support any elected official who takes the risk of proposing and fighting for tough budget cuts. We do not argue that cutting government spending is easy. There are hundreds of special interests who fight to get more money from the state. SBAM pledges to fight alongside those who show leadership and stand up to the special interests that fight against government reform.

The Small Business Alternative Profits Tax should be expanded so that more small businesses are eligible. We oppose officer compensation being used as part of any definition of small business for the purposes of determining who qualifies for the small business alternative tax. Tax relief for these businesses will mean more jobs.

Permanently end the Estate Tax. In 2001, federal legislation passed that incrementally reduced the estate tax rate and increased the exemption until 2009. That tax is completely eliminated in 2010, but it comes back in full-force in 2011. Michigan’s estate tax is tied to the federal tax and that has led to the current situation where Michigan does not have an estate tax. Should the federal estate tax be re-established in 2011, the state estate tax will also be back in effect. One-third of small businesses today would have to sell or liquidate part of their firm should they have to pay estate taxes if it is to come back in full. Action will be necessary to protect small businesses from this burdensome and unjust tax.

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