Report: Michigan Gov. Rick Snyder’s Tax Plan Will Hit Poor Families 1,000 Times Harder Than The Wealthy

By Tanya Somanader/Think Progress

Michigan Gov. Rick Snyder (R) spent his first year in office drawing up substantial tax cuts for corporations and the wealthy while shifting the tax burden onto Michigan’s most vulnerable. In a state where the poorest 20 percent of Michiganders pay a tax rate of8.9 percent and the richest one percent pays 5.3 percent, Snyder’s tax reform plan will only make the disparity worse come fiscal 2013.

In fact, according to the Michigan League for Human Services, Snyder’s tax reforms will “hit poor families 1,000 times harder than wealthy households”:

The League released a report that says the tax plan will hit poor families 1,000 times harder than wealthy households. Families making less than $17,000 a year would pay one percent more in taxes in 2012, while families making more than $334,000 would see their taxes go up by only .001 percent, the report states.

Gilda Jacobs, president and CEO of the League, wants to see a fair tax structure that doesn’t hit the poor harder than the wealthy.

“We want to be sure that we have shared sacrifice.” she says. “If you’re making $17,000 a year, this is going cost you about $100. That’s a lot of money to these people. That’s a car payment, that’s a winter utility bill. It’s huge.”

Indeed, state revenues will now rely more heavily on the middle class as the new tax code will generate $1.4 billion more from personal income taxes while dropping nearly $2 billion in revenue from businesses. And though Snyder insists that such corporate income tax cuts are sure to create jobs, the economic evidence proves otherwise. As the Center for Budget and Policy Priorities notes, such corporate tax rates fail to produce a net short-term stimulus, tend to cause a near-term drop in in-state economic activity because corporations are unlikely to spend the full amount of the tax cut, and actually creates “little or no added incentive for corporate investment in the long run.” At best, it produces a boost in economic productivity and jobs by only 2 to 3 percent.

But when it comes to programs that do provide a verifiable boost to the economy likeunemployment insurance and food stamps, Snyder went straight for the ax. Indeed, he cut theEarned Income Tax Credit, funding for school districts, and vital aid for 11,000 low-income families and nearly 30,000 children. And with nearly half of Americans one financial shock away from falling into poverty, there’s no question that Snyder’s giving Michiganders a future that is 1,000 times more insecure.