Snyder’s Big Corporate Tax Break Backfires

Amy Kerr Hardin/Democracy Tree

Remember when Gov. Snyder just willy-nilly gave away $1.7 billion in tax breaks to Michigan corporations, all completely untethered to any job-creating requirements, and then assured the state that his business buddies would come through with a flood of employment opportunities? Well, so do the 8.7 percent of officially unemployed Michiganders found in last week’s state jobs report (with a whopping 18 percent in Detroit, and only a .6 percent improvement since he was elected). Compared to the national average of 7.6 percent from the June numbers out of the Bureau of Labor Statistics, Michigan continues to seriously lag.

On Sunday, the tired-looking governor appeared on Meet the Press to discuss the situation in Detroit. He anemically spoke about his committment to “focus on the citizens” of the city by providing them with more accountability in government. He additionally expressed that he was “empathetic” with those public sector workers that will likely feel a profound impact on their pensions and healthcare plans. He also talked about the importance of“blight removal” for the city.

Hello, jobs?

Immediately after Snyder, former Governor Jennifer Granholm came on. She launched into an energetic explanation of how the Motor City can move forward. She strongly advocated for a robust and coordinated federal manufacturing policy — an argument that makes good sense considering the ultimate futility of the ongoing state-against-state fight for businesses to relocate. Democracy Tree reported last month that Michigan has already given away the most corporate tax “mega-deals” in the country — 29 in total, costing an estimated $7.1 billion in tax incentives over the past thirty years, all to mostly Fortune 500 companies.

Barely two months ago, the Bloomfield Hills building firm, PulteGroup (listed as number 501 on the Fortune 1000), announced they were moving to Atlanta, Georgia after having been heavily wooed by their governor and city leaders in a full-court press that bagged the homebuilding giant some sweet cash. While Michigan will lose a little over 300 jobs, the Wall Street Journal reported on the Georgia bargain:

The city [Atlanta]and state are collaborating on an incentive package for Pulte that includes a $1.5 million state grant, as well as a city grant whose size has not yet been determined, according to Brian McGowan, chief executive of Invest Atlanta, the economic development arm of the city.

Georgia’s aptly named Republican Gov. Nathan Deal boasted of his corporate coup thusly:

“Georgia is a natural headquarters for homebuilders such as PulteGroup. Pulte will not only be able to quickly build its growth markets from a strategic central location, it will also thrive in a dynamic business environment powered by the fourth-largest population growth in the country.”

And just today we learn that Georgia’s Department of Economic Developement has lured away Troy-based Field Services Engineering. The firm plans to invest $5 million in expansion and add 50 jobs to the Peach State’s economy.

Gov. Deal isn’t alone. Texas Gov. Rick Perry has been peppering other states with radio and television spots promising a better business environment. In New York state alone, he recently spent one million on TV ads, and $600,000 on radio.  The ads say:

“The new New York sounds a lot like the old New York. Higher taxes. Stifling regulations. Bureaucrats telling you whether you can even drink a Big Gulp. Texas is calling. Your opportunity awaits.”

Republican governors, with their tax deals and deregulation promises, are cutting each other’s throats, while greedy business moguls continue to vacuum up the dollars thrown at them, possessing no sense of corporate citizenship or loyalty to the workers, let alone to these foolish elected leaders showering them with cash.

Will the governors discuss this at their upcoming 30th Biennial Mackinac Republican Leadership Conference scheduled for September 20th through 22nd at the Grand Hotel on Mackinac Island? (Oh, how Democracy Tree would just love to arrange the seating charts at that gala affair.)

North Carolina Lawmakers Ram Through Plan That Would Increase Taxes On Poor People

By Igor Volsky/Think Progress

North Carolina lawmakers rammed throughmassive tax reforms on Tuesday that would disproportionately benefit higher-income earners, bringing the measure to a vote in the House after approximately 25 minutes of debate. The legislative compromise, which was formally unveiled on Monday, represents some of the biggest most regressive changes to North Carolina’s tax code in eight decades. The Senate will take up the measure on Tuesday afternoon, both chambers will hold final votes Wednesday, and Gov. Pat McCrory (R) is expected to sign it by the end of the week.

“Those with average incomes of nearly $1 million would receive a total tax cut of nearly $10,000,” the North Carolina Justice Center estimated, while the bottom 80 percent of taxpayers “would experience an increase in their taxes on average.”

The package will “reduce the number of individual income tax brackets from three brackets to one while raising the standard deduction and capping deductions on mortgage interest and property taxes. The current income tax rates of 6, 7 and 7.75 percent based on income would be reduced to a flat rate of 5.8 percent in 2014 and 5.75 percent in 2015.”

The tax rate corporations pay would fall from 6.9 percent “to 6 percent in 2014 and 5 percent in 2015″ and could drop to 3 percent in 2017 “if tax revenues grow at a strong enough clip.” The estate tax is also repealed. As a result, revenue would fall by $500 million in two years and $2 billion over five years, laying the groundwork for additional cuts to government spending.

Meanwhile, sales taxes on manufactured homes, modular homes, and electricity sales would eventually increase, disproportionately impacting lower-income residents. In 2014, the state would also end its sales tax holiday weekend in August and the Energy Star appliance sales tax holiday weekend in November.

The state’s tax system already favors the wealthiest, as the bottom 80 percent pay between 9 and 10 percent of their income in combined sales and income taxes compared to just 6.5 percent for the top one percent of earners. The plan passed Tuesday would exacerbate that inequity. The North Carolina Justice Center warns that lower income North Carolinians would see their tax burden increase under the plan, while the very rich would experience a tax reduction of up to 1.1 percent of their earnings:

In March, the legislature repealed a tax credit for 900,000 working families in the state and had initially proposed eliminating the state’s income tax outright.