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The “Proos & Cons” of the Tax Fight in Lansing

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State Senator John Proos of St. Joseph typically finds himself aligned with business interests in the state of Michigan, however, the manner in which the issue gets resolved may not win a lot of friends at the Michigan Chapter of the National Federation of Independent Business in the current income tax fight in Lansing.

Proos announced Thursday that a projected state budget surplus of more than $200-million should be used to reduce the state's personal income tax. How the books are balanced as a result, however, could run in opposition to the one of the largest organizations advocating for small-business in the state, the NFIB. Their State Director Charlie Owens has said, "For many small businesses that are not corporations, the income tax is their primary business tax as they pass through profits from the business to their income tax return." However, if any income tax roll-back or phase-out currently under consideration in the Michigan Legislature could potentially increase other taxes, Owens wants all of that to be evaluated carefully by small business.

Owns cautions that "In the past, there have been proposals to lower or eliminate the income tax that were predicated on increases in other taxes to make up some or all of that revenue." He suggests, "Our members have not been receptive to some of those proposals, particularly ones that included an increase in the sales tax or expanding the sales tax to services to make up the difference."

Proos hasn't floated any sort of counter-balance to a tax reduction, he simply points out, "Michigan's economy continues to recover and create jobs, and that is great news for all Michigan residents." He adds, "We should remember that the expected increase in state revenues is a direct result of Michigan's economic growth and having state government live within its means." 

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Proos concludes, "We should use the projected surplus to provide tax relief to Michigan families — and not as a winning lottery ticket to fund more government."

State fiscal leaders from the Senate, House and executive branch and economists from across the state met yesterday for the annual January Consensus Revenue Estimating Conference at the Capitol. Their economic and tax revenue projections are used to draft budget proposals for the next fiscal year, which begins on October 1st.

Owens of the NFIB says small business members will have the final say in any proposal that the Legislature conjures, as the group will place the issue before its members for a vote. He says, "We are anxious to see the proposals that emerge so we can share them with our small business members." He concludes, "The perspective of the people that have to make payroll and pay taxes in our state is always the best litmus test for any proposal."

For his part, Proos says "I have done much to keep spending down. During my time as Chair of the Senate subcommittee for the Corrections & Judiciary Budgets, the Senate has passed $362-million in savings." He adds, "By being fiscally responsible with taxpayer dollars, we can invest more in key priorities while also putting money back into the pocketbooks of Southwest Michigan taxpayers."

Small business owners will be pleased to note that Proos gives them credit, saying they and the hardworking families of Michigan are, "the lifeblood of our state, and they have earned a break." He's likely hopeful that his colleagues, like the members of the NFIB are hopeful, that the Legislature can find a way to offer breaks without hikes elsewhere in the system that cause other issues for small business. 

As they say in Lansing as well as on Main Street — Stay Tuned.

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