Question 1): Last Thursday, the Michigan House of Representatives approved a wide-ranging plan to lower taxes for lower-income workers and retirees and funnel more money into business “incentives.” The Democrat-sponsored legislation also includes a $180 onetime check for Michigan tax filers. But that could be in jeopardy if Senate Republicans block the legislation from taking effect immediately, a vote that could happen tomorrow (Tues.)
Over strong protests from House GOP lawmakers, the deal passed 56-53 without debate. Rep. Mike Mueller (R-Linden), was the lone Republican to join Democrats in support, while Rep. Dylan Wegela (D-Garden City), opposed the bill. Otherwise, every Democrat and every Republican voted the “party line.”
The legislation now heads to the Senate, where Republicans could make or break the tax rebates. As written, the checks would go to state filers if the bill is signed and takes effect by April 18. That means at least six Senate Republicans would need to support it to meet the 2/3 threshold required for Immediate Effect (IE), if that means anything anymore. If IE doesn’t happen, the bill can’t take effect until early next year, defeating the purpose of obtaining “instant relief” NOW.
The bill, numbered House Bill 4001, would phase out taxes on public and private pensions and expand the state’s Earned Income Tax Credit (EITC) to 30 percent of the federal rate, up from 6 percent. The tax expansion would save about 700,000 families some $600 per year, while 500,000 seniors would save an average of $1,000 from the pension tax.
Both of those tax cuts had bipartisan support when they were approved earlier in the session in a different vote, but provisions to use $800 million to fund onetime $180 checks and spend $600 million in ongoing economic development (dubbed “corporate welfare” and “picking winners and losers” by its detractors) are far more controversial.
One upshot of the Democratic deal is that it would apparently negate an income tax rollback that otherwise would have been triggered by state general fund revenue growth in fiscal year 2022, which ended last Sept. 30.
The state’s income tax rate is evidently set to drop to 4.05 percent from 4.25 percent (there’s disagreement even about this). That would save filers who make $100,000 about $210 every year and those who make $30,000 about $60 per year.
What will be the outcome of this early explosive confrontation between majority Democrats, who hold narrow, two-seat majorities over Republicans in both chambers? If HB 4001 becomes law, is it good policy? And does either side hold an advantage in “messaging” its argument, pro or con, for political purposes?
Answer 1): Two aphorisms come to mind — “Never take points off the board” and “A lie gets halfway around the world before the truth can get its pants on.” Republicans emphasize the former, especially since it was THEIR signal accomplishment back in 2015 when majority GOP lawmakers and then-Gov. Rick Snyder enacted an automatic roll back of the state income tax from 4.25% to 4.05% if state revenue swelled to a certain high level, whenever that might happen. Well, it’s happened as of the end of the last fiscal year on Sept. 30, 2022. In other words, broad-based, across-the-board tax relief is about to kick in automatically without the legislature doing anything at all. The points are on the board for Michigan taxpayers! BUT WAIT! Gov. Gretchen Whitmer and legislative Democrats now want to take it all away and substitute a puny $180 one-time “rebate” check to each Michigan tax filer, plus create a giant $600 million “slush fund” that faceless state bureaucrats can use to pick what they think are “winners” in the perpetual War over Economic Development with other states. Wait a second — that’s a LIE, say Whitmer and the Democrats. What’s really happening is that frustrated Republicans are trying to block a bill that will help lower-income families, public employees, and pensioners of all stripes just because the GOP is angry that their 2015 scheme to cut Michigan’s flat rate tax is being scuttled. By the way, a drop in the flat rate tax (a tax that Democrats have always opposed) means billionaires like “Betsy DeVos” (always the Democrats’ favorite whipping girl) will be able to get a far bigger tax break (in dollars, not percentage) than anyone in “working families.”
Oh, by the way, there will also be the question of whether Senate Democrats will “pull the trigger” and attempt to change Senate rules to abolish a roll call vote for IE on HB 4001. This is akin to the perennial debate in Washington, D.C., over whether to invoke the “nuclear option” and abolish “cloture” in the U.S. Senate, which Democrats badly want now that they control the chamber. In Michigan, Senate Democrats could abolish a roll call vote on IE on HB 4001 and simply “gavel it through” with Lt. Gov. Garlin Gilchrist (D) at the controls and “not seeing” the obvious presence before him on the Senate floor of far fewer than 2/3 Senators AGAINST IE. That’s how the House has been doing business for years, no matter which party was in control of the chamber. This will all be appealed in court, but the gutless judiciary will once again rule that “It’s not our decision to make. We will not intrude on the right of the Legislative branch to make its own rules.” Remember, the judiciary doesn’t want to make legislators mad — after all, legislators set and control the salaries of judges and justices.
Question 2): The Michigan Republican Party faces huge challenges heading into its Feb. 17-18 state convention at the Lansing Center. The most important test of all will be picking a new chairperson. There are 11 eligible candidates but no clear frontrunner, although attorney Matt DePerno, the GOP nominee for Attorney General last fall, has secured the endorsement of former President Donald Trump. Kristina Karamo is hot on his heels — she was the party’s failed nominee for Secretary of State last year. Maybe Scott Greenlee is the only hope of delegates who would like to see someone who has actually succeeded in raising campaign cash and electing people. So, what will happen? And does it matter?
Answer 2): In historical terms, whoever is elected chair will join an illustrious group, which includes future and former governors, U.S. senators, attorneys general, and federal and state justices and judges. 46 men and women have served, four of them in split terms like the current outgoing chairman, Ron Weiser. One “split-termer,” Gerrit J. Diekema of Holland, served from 1900-1910 and then, roughly two decades later, came back to serve again from 1927-29.
For instance, in the 1980s a troika consisting of state Senate Majority Leader John Engler, National Committeeman Pete Secchia (a strong fundraiser), and chairman E. Spencer Abraham ran the show, with major finance help from Randy Agley, Heinz Prechter, Jim Nicholson, and Mike Kojian. About the same time, National Committeewomen Andrea Fischer Newman and Ranny Riecker also could raise dough.
Later, chairs who were personally wealthy like Betsy DeVos, Bobby Schostak, and Weiser could contribute large sums of campaign cash themselves, and they could raise money from major donors, too.
What if a chair was a great organizer but wasn’t personally wealthy, which was more often the case than not? They had to turn to the moneymen to get the job done — that’s what Elly Peterson, the party’s first female chair (1965-’69), did with the help of financier Max Fisher and oilman Harold McClure. More recently, U.S. Rep Dave Camp was a strong fundraiser in Michigan’s Congressional delegation during his many terms in office.
There are other ways party leadership can manifest itself without a big title. Onetime executive directors like Bill McLaughlin, Jerry Roe, Doyle and, more recently, Gary Reed, Kim Jorns, and Greg McNeilly fit that description.
Of course, when a political party holds the governor’s office, usually whoever is the governor picks or heavily influences the selection of a chair. Thus, Governors George Romney (with Peterson), Bill Milliken (with McLaughlin and former Rep. Mel Larsen), and Engler (with Doyle, DeVos and Rusty Hills) could depend on someone as chair with whom they were comfortable. Rick Snyder was an exception — he allowed the party to operate pretty much independent of his predilections, although Weiser obviously exercised a lot of influence on the governor at the time of the enactment of the state’s first Right to Work law in 2012.
But what happens when there is no Republican in the governor’s office and, for that matter, in few other state offices as well — like now? That presents the chair with a daunting task, much as Larry Lindemer faced in the late Fifties. A little later, Elly Peterson had Romney in the governor’s office, but that’s all she had after the GOP was wiped out elsewhere in the 1964 election by Lyndon Johnson’s landslide win over Barry Goldwater. Peterson turned it all around in 1966 when the Republicans knocked off a former Democratic governor (Soapy Williams) to win a U.S. Senate seat, unseated five incumbent Democratic Congressmen, ousted a Democratic Supreme Court justice, regained control of both the state House and Senate which they had lost two years before, and swept the statewide education board races.
The way Peterson did it was by bridging all the factions of the state GOP to get everybody singing from the same hymnal as they faced a common opponent —the Democrats. Last year, it was obvious to anyone following Michigan politics that the Republican fundraising wing was estranged from other elements of the party, who spent much of their time and energy disparaging the major sources of financial aid they desperately needed to win. Already, the most recent figures on fund-raising indicate the “donor class” is deserting the Republicans in the wake of the ’22 election. If the GOP doesn’t correct this in a hurry, it’s in permanent trouble.
Putting Humpty Dumpty back together again is a tall order, but the next GOP chair should realize, when looking at the honor roll of past chairs, that it can be done.
The Oakland County GOP delegates usually control the state convention due to the large number of delegates the county party sends. That is why Kristina Karamo of Oak Park believes she can beat other candidates at the state convention during the vote.
Tim Sullivan says
Nice article, Bill. I fully expect the Senate to abolish the roll call vote for the tax package. In politics, all sides need to be reminded now and again that what goes around eventually comes around. Usually at the most inopportune time.
The real question is how, or even if, the media cover it. And if they do cover it, will they background on what each package does; how much money is involved; and how the rules are changed, and why. Not holding my breath.
One thing I am not sure on about the $180. Unless I misheard Chad Livengood on OTR this past Friday, married couples get $180, but singles, even those “living in sin” (as Chad pointed out he is), the individuals get a full $180 check. That might make some interesting reporting.
As for the GOP chair fight, the GOP is still trying to figure out if they are the party of the traditional/business interests, or a populist one. I see no potential chair who can rally both groups. The monied interests want the GOP to do their bidding as it were – tax cuts, deregulation and so on – regardless of how this affects the average guy. As noted earlier in TBR, the monied interests sat on their money for executive offices when their favored candidate did not get enough signatures to get on the ballot, and they are apparently doing that now. They are looking for someone to blame for the election outcomes (wasting a bunch of money on legislative races that they lost) as long as it does not entail them looking into the mirror. An odd way to win influence if you ask me, unless they’ve secured from Gretchen a promise on right to work not going away.
It is still unclear if the populist/Trumpian wing of the state GOP is truly populist. At the risk of offending Poli-Sci professors everywhere, there are two major cornerstones of populism.
The first is that they are insular in their approach to government – think George McGovern and his “Come Home America” slogan. Take care of ourselves first then worry about other places. This part they are good with.
The problem is the second part. When government intervenes in politics, the economy and the like, populism insists that it is on the side of the little guy. The worker against the boss; small business against big business; farmers and practically everyone against the bankers and insurance companies. This part is not real compatible with the goals of the establishment and donor class wings of the GOP. They like tax cuts, the massive deregulation that has occurred under Govs. Engler and Snyder, as well as a preference of many elected GOP officials for consumption taxes (sales and the like) over income taxes as the former has a greater impact on the less wealthy while the latter impacts the wealthy more.
I’m betting the establishment wing will most likely win as money talks and right now the GOP has very little of it.
Walter L. Sorg Jr. says
re: Your concern that the media won’t cover this. Although the number of reporters at the Capitol have decreased, the quality of their coverage has not. The success of Bridge Michigan’s online reports has forced The Detroit News, Detroit Free Press and mLive to up their game. Between them there are some excellent journalists who are thorough, accurate and diligent.
David Waymire says
Worth noting: Michigan today ranks 5th lowest in the nation in state and local taxes combined, according to the conservative tax foundation. Which explains why our schools are unable to hire the best and brightest, our cities have huge pension deficits (massive cuts to revenue sharing), roads suck, parks need work, etc. etc. etc. and we can’t attract and retain smart college grads who have plenty of options. Also worth noting: Our current tax system imposes a heavier burden on lower income families than the wealthy. One easy to see example; Renters pay 18 mills of school operating property taxes. Home owners — who tend to be wealthier — pay only 6 mills. So when one group wants an across the board tax cut…well, as the article notes, “That would save filers who make $100,000 about $210 every year and those who make $30,000 about $60 per year.”
David L Richards says
Here is a link to the tax information you cite: https://taxfoundation.org/publications/state-local-tax-burden-rankings. Of interest is that at least two of the four states with a lesser burden than Michigan (Alaska and Wyoming) have significant revenue from oil and gas production, so Michigan is almost at the bottom for the states without that revenue. That is significant in regard to the issue of reducing the current Michigan income tax rate.
John C Stewart says
Bill- thank you. Comprehensive analysis of the “TAX EXPLOSION” IN THE STATE CAPITOL. Some what predictable what will happen in the State Senate. Dems are firing on all pistons. Repubs. must react.
Brilliant analysis of the race for Party Chair. I remember Elly Peterson and Mel Larsen. Hopeful for an intellectually honest awakening that Scott Greenlee will be elected Republican Party Chair. We will know this Saturday, Feb. 18 in the Lansing Center.
Robin K. says
Scott Greenlee is a common-sense choice for delegates.
He has a long history of electoral success in the campaigns he has run and has led the GOP at many different levels in his decades-long career.
But maybe the time for common sense is over at the GOP state convention this Saturday in Lansing. MAGA madness may prevail……………………………………………………………………
Popo cat says
Wonderful read, Senator. It’s been one week since your article, and the votes are in: Karamo is the new GOP head. She wasted no time moving on from her unsuccessful bid three months ago, losing to Benson in the SOS race.
I could not agree with you more on two points: 1) the MI GOP heads have had an illustrious history; and 2) Democrats faithfully love to hate Betsy DeVos.