Gebruary 24 2011

THE TAX ATTIC with Jerry Coon

February 24, 2011 // 0 Comments

Main points of Snyder’s plan discussed Holy cow! Governor Synder has really upset the apple cart. Of course, he would argue that the apple cart needed to be upset this time. No one should be too surprised, since he was elected just over three months ago, running on a platform of fixing Michigan’s financial condition. At least he somewhat uniformly upset everyone’s apple cart. The state of Michigan has been in a tough spot for some time now. The last few years they have used smoke and mirrors to balance the budget. One year it was the cigarette lawsuit settlement. Another year it was a combination of items, including the $250 lifetime trailer license plate fees. Last year it was stimulus money and this year it was stimulus money and the federal “edujobs” dollars. There just aren’t any more rabbits in the hat. Next year was going to be a 1.8 billion dollar deficit problem. So last Thursday, the governor presented his ideas of how to right the ship. His proposed budget for the October 1, 2011 through September 30, 2012 fiscal year still spends 47 billion dollars. It does cut total spending by 1.2 billion dollars and increases revenues by 1.7 billion dollars. His idea is to flatten out and simplify the tax code. Is this the beginning of a nationwide movement to a flat tax? I would bet there are quite a few states looking at what is going on in Michigan—peacefully going on in Michigan—and waiting to see how it works out. Perhaps our federal government should be paying attention as well. Let’s go over the main tax points of the governor’s plan. There are a few main provisions and lots of minor provisions. First, corporations will pay tax at a flat 6% tax rate based upon the corporation’s federal taxable income. His bill eliminates the Michigan Business Tax (MBT) in totality. This will free up a whole staff of MBT experts to work somewhere else in the Treasury Department. If not one other simplifying measure was instituted, just getting rid of the diabolical MBT has to cut several hundred or even thousand pages out of the tax code. Good riddens. Second, the personal income tax rate will drop to 4.25% from […]