Saturday, May 26, 2007

Not all tax pain is created equal

Pop quiz: If you're married, have two kids and make $57,000 per year, you're:

A. At the federal poverty level.

B. At the median household income for Michigan.

C. Now spending 92 percent of your salary on gasoline.

If you said C, you're off by several percentage points — but not as many as you'd hope.

If you answered B, you're right on the money. The poverty level for four actually is about three times less — $20,650 per year.

If you said A, you're probably a politician whose handlers forgot to feed you the correct answer on that and how much a gallon of milk costs.

Most of us know $57,000 ain't bad. We don't have to pick up staples at the food bank and sleep at the homeless shelter. But our hard-earned dollars don't stretch as far as they used to. We worry about losing our homes, filling our tanks at $3.65 per gallon and having our kids get priced out of college.

We know Michigan's in trouble just by looking at our drained bank accounts and nonexistent retirement plans.

Nonsense, argues Charles Ballard, a Michigan State University economist. The Great Lakes State is on a roll.

The past 30 years have been good ones for folks who probably flunked the means test above — those 100,000 or so households out of 3 million in Michigan. If you're looking for signs of recession, don't meander through the pristine enclaves of Okemos, East Grand Rapids and Bloomfield Hills.

Households making $166,000 per year or more — to put that obtuse richest 5 percent in real dollars — have been able to build McMansions and buy Mercedes, even as the Big Three implode and state budget deficits balloon.

Actually, the well-to-do are doing even better, thanks to tax cut after tax cut over the past 12 years. But money to keep kids vaccinated and police on patrol has to come from somewhere.

And it has — from you and me. Each cut has shifted the burden to those who work on the assembly line, teach young minds or are retired on a fixed income.

Ballard sums up Michigan's tax system, which is one of the most regressive in the nation, like this:

"What you have is the top 5 percent doing fabulously well, the top 20 percent ($92,000 household income) doing quite well and the other 75 percent struggling."It's a massive widening of inequality ... and nobody is talking about it."

A lot of leaders in Lansing don't get it. It's not just that they make a minimum of $79,650 per year. It's that many of them don't send their kids to public schools, don't ride the bus to work and don't worry about medical bills because they have the best plan money can buy.

When Gov. Jennifer Granholm blasts the pain of budget cuts, it's a pain she doesn't directly feel.

When House Minority Leader Craig DeRoche complains he can't sell his second house in tony Novi as proof that Michiganders can't afford a tax hike, he's out of touch.

What they need is more input from the majority — the struggling 75 percent — so they can pound out a budget with fairer taxes and better services.

But since hamstrung policymakers don't seem eager to invest in their constituents, we would do well to invest in ourselves.

Not just by voting for local millages to keep fire stations and schools up and running. But by socking away as much as we can, so our kids can go to Harvard like the governor, or study at the Sorbonne like Senate Majority Leader Mike Bishop.

Yes, even tuition at our world-class state universities has spiraled out of control, but they remain the best boot camp for the next generation of leaders.

And with the rate of progress in Michigan, they'll likely get stuck with plenty of problems to solve.

Saturday, May 12, 2007

Taxpayers made good choices for Michigan on Tuesday

I am a Michigander by choice, not by birth.

When I moved here almost three years ago, I was fresh off a stint covering the Iowa presidential caucus, just about the only reason to live in the cornfields. And that circus only stampedes into town every four years.

Moving to a land lush with lakes, museums and actual professional sports teams (four of 'em) seemed like a pretty good deal.

After scaling Sleeping Bear Dunes and submerging myself in Diego Rivera's fervid murals, I fell in love — hard and fast.

Little did I know, I was bucking the trend to migrate into the Mitten State, instead of high-tailin' it out of here like 20-somethings by the truckload.

Sure, I'd seen the headlines about Michigan's catatonic economy. But it just didn't seem possible that the land built by W.K. Kellogg, Herbert H. Dow and Henry Ford could have plummeted to the prosperity level of Mississippi.

And it didn't seem plausible we would ravage funding for our world-class public universities to plug the state's $1 billion structural deficit each year — which will never go away until we overhaul the tax system.

But after working everywhere from Howell to Saginaw to Battle Creek, it became clear. My adopted state was in trouble.

Now we have one of the worst budget crises in the nation.And if Gov. Jennifer Granholm and the Legislature can't thrash out a compromise to choke off a $700 million deficit by June 1, we'll see more teacher and police layoffs, more prison and school closings and more citizens without medical care.

We don't have the money.


But wait, it gets worse. The government could shut down — and that's not a good thing. We'll all feel the squeeze, beyond being unable to renew a driver's license. Cash-strapped cities and townships depend on state money to collect our trash, fix our roads and run water so we can flush our toilets. That's the stuff we take for granted.

So how do we solve this mess?

Tuesday, voters from just about every corner of Calhoun County took a surprising step. They modestly raised their own taxes or turned down rollbacks.

As much as we're all hurting, most people seem to think our schools, police and sewage systems are hurting, too.

Still, there are many, like White House adviser Karl Rove, who stubbornly maintain Michigan's problem is "too many taxes and too much spending."

That was the turd of conventional wisdom he dropped while recently collecting some cash for the GOP in Jackson. It's a sentiment too often echoed by Luddite legislators barely four months into office.

As someone who's just had to fork over a whole lotta money to four different governments, I can say that taxes do not top my list of favorite things.

But we've taken the tax-cutting frenzy too far, and our state is withering because of it. Not even Standard & Poor's believes purging $2 billion more in business taxes will jump-start the economy.

Almost 65 percent of Michiganders believe we need both service cuts and tax increases to get us out of the doldrums, compared to 23 percent who think cuts can do it alone, a new EPIC-MRA poll shows.

But Granholm is locked in an ego war with Senate Republicans, who seem to think approving a service tax is akin to calling for the slaughter of the firstborn.

They need to take a breath, and a page from our local officials, and invest long-term in what matters in Michigan — instead of slashing and burning our way to mediocrity.

All our kids need a top-notch education from preschool to postgrad. Cities like Battle Creek, Muskegon and Detroit need to undergo the renaissance Chicago has. Enough police need to be out there nabbing drug dealers and murderers.

Those aren't luxuries. That's called living in a civilized society. And study after study shows boosting critical programs — especially education — is the smartest economic development investment the state could make.But that takes money.

And a heaping dose of common sense, like Calhoun County voters showed Tuesday.

Most of all, it takes risk and innovation. Which was the very spirit the Wolverine State was founded upon, after all.