It Only Gets Worse

Taxes that increase every year to keep up with inflation.

STOP-167Say What?

We have used the 16.7% tax increase in the stop sign logo, (at the right) and will continue to do so.  However, it is hardly a complete look at the tax implications if proposal 15-1 were to pass. We are attempting to find all the ways in which our prior legislative session gave us the shaft, including train to nowhere projects, redistribution of wealth, and the fuel tax replacement components.

Folks might actually be aware of the replacement fuel tax and that it will be more than what the was tax was before. Presumably, it simply replaces the sales tax that has been collected on fuel, that does not go toward roads.  However, when one looks at the analysis done by the House Fiscal Agency, there is a paragraph that explains the mechanism accurately; and in particular, a line at the end of that paragraph points out an easily missed point.Part of the breakdown of HB 5477:

The bill defines the initial average wholesale prices as the 12-month rolling averages for gasoline and diesel from July 2013 through June 2014, which means the initial tax rates would be 41.7 cents per gallon for gasoline and 46.4 cents for diesel. For future years, the 12-month rolling average period ends on the last day of the month that is three months prior to the month the new rates would take effect. The bill contains an inflation adjustment mechanism to limit large swings in the cents-per-gallon levy that may result from volatile gas prices so that the levy cannot increase by more than 5 cents per gallon above the rate of inflation. Additionally, the levy could not fall below the initial rate, adjusted for inflation or 5% per year, whichever is less.

Emphasis mine.

Stop-100The ‘wholesale percentage’ tax on fuel never drops.  The ‘wholesale percentage’ is only the starting point, 12 cents a gallon above today’s fuel tax rate on unleaded regular  This fraudulently labeled tax does not follow the ups and downs of the wholesale fuel price, only the ups.  When the wholesale price of fuel does drop over a year, the tax rises by a the rate of inflation or 5% per year, whichever is less.

There is a five cent per gallon tax rate increase ceiling in HB 5477, but it is of little relief.  Do the math in HB 5477, Section 5 (1)(b) – you will see that the Michigan fuel tax rises by $ 1.00 per gallon every 20 years.  This tax ratchet increases Michigan’s fuel taxes to the highest in the nation by FY 2017, the second year of this fuel tax scheme.  In only one year it will exceed even the very best efforts of the tax drunk political thieves in New York State.  And the sky is the only limit from there!

That level will continue to rise each year due to inflation. Using the initial rolling averages, it amounts to a permanent doubling of the fuel taxes compounded yearly based on inflationary forces.  It means that all the taxes can do is literally ‘ratchet’ higher each successive season.

All of this to feed a machine that works so well, right?

Seen enough yet?

You Betcha! (27)Nuh Uh.(0)

  12 comments for “It Only Gets Worse

  1. Kevin Rex Heine
    February 24, 2015 at 12:26 pm

    Scales and I were tossing this around yesterday via e-mail conversation. As I've pointed out in a comment thread elsewhere, the total tax increase per person, assuming that Proposal 15-1 passes, will be $201.82 per person. Currently, the per person tax burden (based on the current total tax revenue being received by the State Treasury) is $977.51.

    Dividing the former by the latter produces a per person tax increase of roughly 20.6%.

    Remember that that increase is per person, not per taxpayer. So those of us in living in this state who do pay taxes will also have to shoulder the increased burden of those who live in this state but don't pay taxes (such as minors and . . . others).

    A total tax increase of 20.6% per person . . . I really do think that you ought to update that logo, Jason, and add in the words: "Vote NO on Proposal 15-1 on May 5th." Could you give it a shot, and see what it looks like?

    You Betcha! (6)Nuh Uh.(0)
    • Corinthian Scales
      February 24, 2015 at 1:12 pm

      Consider it a resident provided tourist subsidy.

      How's that for a PURE Michigan commercial campaign?

      Somewhere on a college campus in Berkley, the former First Gentleman, and Jennifer have to be giggling their asses off at 1,607,399 dolts who voted for a second dose of a $54B budget Snyder/Calley.

      You Betcha! (8)Nuh Uh.(0)
  2. Corinthian Scales
    February 24, 2015 at 9:10 pm

    Then comes the 30% 'Birthday Tax' change.

    $940,500,000 in FY2014 (+$13M from FY2013). Repeal the three year depreciation and IRS deduction?

    Think about it...

    You Betcha! (5)Nuh Uh.(0)
    • Jason
      February 24, 2015 at 10:19 pm

      The gift that would keep on giving..

      You Betcha! (2)Nuh Uh.(0)
      • Corinthian Scales
        February 24, 2015 at 10:31 pm

        You know the story. I expect to see a sign.

        You Betcha! (2)Nuh Uh.(0)
  3. RW Troll
    February 25, 2015 at 11:03 am

    Good article by Sen. Colbeck on road funding showing how MDOT spends near the top of the nation for roads and the results are near the bottom. Reform MDOT anyone.

    http://www.senatorpatrickcolbeck.com/road-funding-rest-story/

    When talking to our State Senator at the convention this weekend, all I heard was why it was the way it was. Not what can we do to fix it. When the legislators can't do their job, just raise taxes. That'l fix it!

    You Betcha! (2)Nuh Uh.(0)
  4. 10x25mm
    February 27, 2015 at 6:12 am

    Analyst: Price Of Gas To Rise 15 Cents Over Next Week…Then Higher

    http://detroit.cbslocal.com/2015/02/...ver-next-week/

    Southeastern Michigan will see scorching price increases during March. A USWA refinery strike is interfering with the changeover of refineries to 'summer blend' gasolines. EPA requires Southeastern Michigan to use a unique in the nation, low particulate summer blend. Difficulties producing and shipping the SEM summer blend will increase the prices of national summer blend used outstate. They effectively compete with each other for refinery and pipeline capacity utilization. Summer blend gas must replace winter blend in all tankage by May 1st by federal law.

    California prices have already risen $ 0.68 per gallon due to an outage at an Exxon refinery in Richland. Their prices are back over $ 3.00 per gallon and still rising. Unless the USWA refinery strike settles, Southeastern Michigan is in for comparable price increases.

    Note that gas prices will be near maximum on the 5th of May. Probably not a good omen for Proposal 2015-01.

    You Betcha! (2)Nuh Uh.(0)
    • Jason
      February 27, 2015 at 7:04 am

      Our union 'brothers' have certainly made it hard for the survival of prevailing wage.

      If we weren't watching firsthand, I would say it is impossible for one to effectively screw oneself.

      You Betcha! (0)Nuh Uh.(0)

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