The speaker for the event, none other than our second executive, Brian Calley, was to be speaking on the newly changed policy.  Mr Calley, being quite literate on the subject, presented the state of the state as well as one could expect out of a majorly planned event in Lansing featuring our executive placeholder.  His presentation reminded us of how a state that cannot legally accumulate debt has been doing so.  His message that we are saddled with obligations though technically not as a result of borrowed money, are still as real and binding.

In fact I had forgotten talking about those realities here and at MTTM over the last few years until he made it clear that it was being addressed while at the same time reducing the overall tax load, and balancing some of the burden more appropriately.  Capital expense costs that are amortized yet not considered borrowed, unemployment money in the billions of dollars that MUST be paid back (thank you for the 99 weeks suckers), and a school pension and benefits liability that is unfunded as yet to the tune of about $40 billion smackers.

His statement was that as a banker, (his profession) and having someone walking in with obligations of $60,000,000,000.00, and showing an income of $8,000,000,000.00 he would have to show them the door.

Yet here we are.

And cutting across the board is not even possible ... yet.

The change on taxing of pensions (and retirement benefits if I am reading the legislation correctly)  will tap some of those liabilities which are frankly in high dollar housholds.  Households that while having aggressively higher income levels would not according to the old tax code be paying any taxes while other Michigan families making half would still pay.  Many will still NOT as this is phased in, but those 50 and younger can expect it to matter, at least a little.  Its not even very much.

And by the time the dust is settled, Michiganders will continue to pay 4.35% a while longer, and the seniors who are the largest growing demographic in the state will still have the 8th most favorable tax environment to retire in.   But at least we are setting up a mechanism to pay for a part of that obligation.

But the only way to move forward and complete the ability to pay as the Lt. Guv explained, is to grow our economy back.

So then there is the business tax aspect.

Lt. Governor Calley made a very important thing known with regard to business statistics.  Michigan Job growth in the 90s was all about local (state) business.  Michigan Job retention in the 2000s was all about local business.  The efforts to attract new start ups for the last 20 years was a failure.  The money to pay for that failure came from (guess who) local business.  Local business owners were asked to pony up and pay for the government trying to create a new (insert capitol of -----  here), because we like being the automotive capitol etc..

Small business however, could not grow while paying taxes twice.

I can personally attest to this.  Having made only a barely taxable personal income from our business this year, it is especially hard to write the check for simply the volume of business mark up as is done with the MBT, and THEN have the privilege of paying on the NET in personal taxes.

I cannot even imagine the harsh reality for small manufacturers in this state who have a much higher value added component to their product than my own.  Add to this, the wages paid to employees included in the MBT calculations, and the punishment abounded with the MBT.  The MBT, and its predecessor the SBT punished small business for simply having the gall to be located in Michigan.

Its amazing we have anyone making anything in this state anymore.  God bless those who stuck around.  Sympathy for those who have left.

I, and thousands of manufacturers will now pay only ONCE at tax time.  How is that not good?

I'll tell you how its not good.

It's not good if we don't understand what changes are being made.
Its not good if we don't have all the facts on where we were.
Its not good if we are fed half truths by those who have a personal stake in one side of the other.

The proper or GOOD solution is relative to a complete understanding of the problem, of what problems exists, and how best to apply fair responsibility to the solution.

You all know I am not a fan of taxes.  But I am supportive of meeting obligations, even when those obligations were made by those in charge before.  And the way in which these are met will necessarily involve some serious moving of the cheese in Lansing.  I have withheld major commentary on this issue, because I felt I did not have enough knowledge of the big picture.   Even now I am putting on the flame retardant suit, just in case.

I must give credit to Michigan's Lt. Governor Brian Calley for his ability to fill in the blanks.  He did a worthy job, and made perfect sense in his presentation.  If there was anyone in the crowd last night who didn't yet understand by the end of his speech, I would be surprised. In fact, as a person who normally carries the video equipment to everything, I am now chastising myself for not doing so this time, and capturing one of the best explanations I have seen to use in this forum.

This tax policy change, in my opinion is the most appropriate way in which this could have been handled.