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.

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