Journalists Bravely Display Their Mathematical Deficit, or......?

The MLive Media Group Editorial Board endorsed Proposal 2015-01 this morning. The endorsement was no real surprise, given the blizzard of slanted reporting MLive has been posting on Proposal 1 over the last 30 days. The real surprise here was the shoddy math cited in the endorsement:

If you currently pay $100 per month in sales tax, which is the average for median income households in Michigan, you’ll pay an extra $1 per month. Because the sales tax is regressive — it falls disproportionately on the poor — Proposal 1 evens the playing field by expanding the Earned Income Tax Credit, which was cut in 2011.

The fuel tax changes will result in an additional 2 to 10 cents per gallon, depending on gas prices. Some of these costs will surely be offset by reduced damage to vehicles as the roads are improved.

Governor Snyder’s FY 2015 Executive Budget projects that Michigan’s current 6% sales tax will collect $ 7.89 billion in FY 2015 on $ 131.5 billion in taxable products. This is $ 797 per year, per Michigan resident. The U.S. Census says that the average Michigan household is composed of 2.53 persons. Thus the current 6% sales tax is projected to collect $ 2,016 per household in FY 2015, or $ 168 per household, per month.  Not $ 100 per month.

Looking at FY 2015 as if Proposal 2015-01 was in effect, the 7% sales tax would collect $ 8.5 billion on $ 121 billion in taxable products. Keep in mind that road fuel will no longer be subject to the sales tax, so we have to back out S 10.2 billion in formerly taxable fuel sales on just over 4 billion gallons in road fuel. This is $ 855 per year, per person. Thus the proposed 7 % sales tax would collect $ 2,165 per household in FY 2015, or $ 180 per household, per month.

So the difference is $ 12 per month, per Michigan household. Not MLive’s $ 1 per month fantasy factoid.

But to see the real effect of Proposal 2015-01 on the average Michigan household’s monthly budget, you have to add in the effect of the increased road fuels tax on 4.6 billion gallons of fuel. After all, we made the sales tax increase look much less painful by backing it out of current road fuel sales.

Using API’s fuel tax estimates for January 2015, the total annual Michigan take on 4.6 billion gallons of gasoline sales is $ 1.39 billion. Under Proposal 2015-01, this take will rise to 1.96 billion. The difference is $ 57 per year, per person.. Thus the current fuel tax would collect $ 145 additional per household in FY 2015 under Proposal 2015-01, or $ 12 per household, per month.

Proposal 2015-01 extracts $ 24 from the average Michigan household each month, just in the sales tax and road fuel changes. $ 288 per year, and you still have the costs of vehicle registration increases on top of this, as well as a number of other financial aggravations in the Proposal.

The moral of this story: Never trust journalists bearing numbers!

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