Republican Governor and business community pushing for higher taxes

You read the headline right. In Oklahoma, not Michigan.

NPR, in a story entitled Tax cuts put Oklahoma in a bind, now Gov. Fallin wants to raise taxes, provides an overview of the push to raise taxes in a deeply red state. NPR writes:

In her State of the State address Monday, Gov. Mary Fallin expressed the state’s frustration. “We have two clear choices,” she said. “We can continue down a path of sliding backwards, or we can choose the second path, which is to say ‘Enough is enough! We can do better! We deserve better! Our children deserve better, too!’ ”

Many of the tax cuts and subsequent revenue failures have happened on Fallin’s watch. Now she wants to fix it, and she’s gotten behind a large coalition of business leaders who have come up with a plan to raise taxes and enact reforms.

The details of the plan were put together by the business community. Their plan is called Step Up Oklahoma. Its supporters include the State Chamber of Oklahoma and many local chambers. The plan calls for increasing sin taxes, energy taxes and the graduated income tax. You read the last item right! A Republican Governor and business community calling for income taxes to go up most on those who earn the most.

Leaving aside the support of the Republican Governor this is quite similar to what happened in Kansas earlier this year. Republican joining with Democrats to override a gubernatorial veto to raise taxes––including a graduated income tax––after a failed tax cut experiment. (See my post on Kansas here.)

Why is a Republican governor and the business community in Oklahoma pushing to raise taxes? To fill a structural revenue shortfall. And to invest more in education. In their case specifically to raise teachers pay. In Kansas it was predominantly to increase funding for roads and education.

What ails Michigan? A structural revenue shortfall and woeful under investment in infrastructure and education. For details see Governor Snyder’s 21st Century education and infrastructure commission reports and the Citizens Research Council report on the precarious state of the General Fund.

One can make a strong case that Michigan is facing the same challenges as Oklahoma and Kansas. That for two decades we overdid tax cuts. The Governor’s own commissions have made the case for more public investments. But unlike Oklahoma, neither our Governor nor the business community has taken the lead in making the case that to pay for the essential public investments we need higher taxes.

And the Democrats are equally to blame here. They not only aren’t making the case either for the need to raise taxes to support education and infrastructure, Democrats in the legislature continue to vote for more tax cuts.

It’s time we stop pretending that we can have the public investments we need and not have to pay for them. Just as in Oklahoma and Kansas, now is the time for politicians––from both parties––and the business community to lead and take to the voters ideas on how to pay for the public investments that are essential to improving the economic well-being of all Michiganders. To make the case that the value of the investments is worth the cost of paying higher taxes.

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Lou Glazer

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.

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