Why I’m voting NO on Michigan’s Proposal 1

I wanted to take a few minutes and let folks know my thoughts and position on Proposal 1.  Let’s take the issues 1 at a time:

      1.     This proposal offends me as a voter.  We elect the state representatives and senators to run the business of the state.  This proposal alleviates the legislature of their responsibilities and pushes it right back to you and me.  This is the work we pay them to do, and it is their responsibility to maintain the road infrastructure in our state.  If they don’t have the revenue through the current tax structure to improve and maintain the infrastructure, then it is up to them to find a way to increase revenue.

      2.     Increase the Sales tax from 6% to 7%:  Fundamentally, I oppose any increase in the sales tax.  Sales taxes in general are considered “regressive” taxes, this is they burden the poor much more than the middle and upper classes.  Why?  Because the poor spend 100% of their income to support their family needs (rent, food, transportation, clothing, etc.), while middle and upper income families only spend a portion of their income on the purchase of goods and then set some income aside in savings and investments.  The savings and investments are not subject to the additional sales tax; gains are taxed as income.

      3.     The new gasoline tax structure proposed language obfuscates the real impact of the tax.  While most reports of removing the sales tax from gasoline, leads one to think that gasoline prices will go down.  This in fact is false.  While gasoline sales tax would go away, it would be replaced with a revised gasoline tax, which is in fact higher than the current gasoline tax.  Again, this burdens the poor more than the middle and upper classes as the poor spend a higher percentage of their income on gasoline.

      4.     License plate fees on new vehicle purchases would also increase under this proposal by eliminating the 10% discount on new car registrations.

      5.     This proposal includes a new $75 surcharge on electric vehicles.  This is just ridiculous, as we should be providing incentives to people that buy these zero emission vehicles.  We shouldn’t be penalizing them.

      6.     While the proposal attempts to offset the sales tax burden on the poor by increasing the earned income tax credit from 6% to 20%.  However, this is just restoring this benefit after the legislature removed three years ago.  So, Michigan took the credit way down 3 years ago and now say they will restore it to offset the sales tax burden on the poor.  Wrong – it just needs to be restored with no increase in sales tax.

So bottom line, Proposal 1 is a mish-mash of poorly thought out regulations that the legislature didn’t want to resolve through their own legislative processes.

I’m not going to let them off the hook!  The Michigan Legislature needs to provide comprehensive tax and spending reform and that needs to provide funding for roads, education, the poor and all other business of the State.