Second Highest Sales Tax in the Nation and Chasing Away Employers

They_screw_the_little_guyWell, that’s what the Snyder/Calley Ballot Proposal to raise the sales tax 16.7% is – Second only to California – and we all know (or should know) what a fabulous job creator environment California is, right? Can you say exodus? Yes, high taxes are a factor driving business away but, massive regulatory issues also plague them, which destroys jobs and their creators. Interestingly enough, and very similar to the Golden State, our One Party Rule majority in Lansing, is on floundering course to the same tax and regulatory environment as can be reviewed here.

Oh! Then there is this wee bit of judicial tax policy “intent” legislating from the bench.

The controversy involves 134 out-of-state companies doing business in Michigan. They sued to collect $1.1 billion in refunds they believed they were due under the 2007 law. If they prevailed, the loss would have created a large hole in the state budget.

happy-snyderThe Michigan Supreme Court ruled in July that IBM could receive tax credits under the old law.

Tricia Kinley, senior director of Tax & Regulatory Policy for the Michigan Chamber of Commerce, said she had not reviewed Talbot’s decision [Engler appointee], but the chamber believed the Supreme Court decision on the IBM case should have settled the issue. She said the chamber found it “utterly disappointing and stunning” when the Legislature and Snyder signed the law to “undermine” the high court’s decision.

“That sends a chilling message to job providers,” said Kinley. “You can try to have your day in court, but even if you go through the great pains of litigating and you win, the Legislature might pull the rug out from under you.”

A spokeswoman for Attorney General Bill Schuette, who defended the state in the case, referred questions to the state Treasury Department, where no one could be reached for comment Monday afternoon.

Surprised the top cop and the taxman hide from their retroactive thievery? Not really, as it has become standard operating procedure for those in today’s government, and an electorate with a 30 sec. attention span. Nevertheless, isn’t this refreshing to see someone at the Michigan Chamber of Commerce has the integrity to speak truth to power? I’m actually glad to see a woman wearing the pants at the chamber who boldly calls it the way it is without pulling any punches on The Big Spending Party.

Yes, Mr. Studley, we are directing this at you. It’s time for your leadership against $700 million more for non-road related spending.

Ps. Uh-hum, tis the season, you know? Until we’re proven wrong, res ipsa loquitor

You Betcha! (19)Nuh Uh.(1)

  7 comments for “Second Highest Sales Tax in the Nation and Chasing Away Employers

  1. JD
    December 24, 2014 at 5:06 pm
    You're a judge (Talbot) charged with collecting $241 million in unpaid fines (revenue) involving a court system (annually) $6 million in debt while at the same time asking taxpayers to kick in another $12.9 million during the largest bankruptcy in municipal history.
    The solution?
    "...Created a one-month AMNESTY program that enabled 58,000 traffic scofflaws to pay outstanding tickets and, in most cases, apply for new driver’s licenses..."

    Undermining Michigan Supreme Court decisions....undermining (or basically throwing out) State District court decisions...what's the difference?

    You Betcha! (1)Nuh Uh.(0)
  2. JD
    December 25, 2014 at 6:59 am

    When we allow the State (our representatives, courts, etc.) to screw others (IBM, GM, insert your jack boot thug cause here) yet subsequently refuse to demand that our candidates 'espouse' these facts come November (or at the very least force others to take a position on same) is pretty hard to claim that we are 'fighting' for anything:

    "...This is not the first time in recent memory that the state has acted to retroactively repeal legislation with the potential for large, negative implications to Michigan’s revenue stream. In General Motors Co. v. Dep’t of Treasury, 803 N.W.2d 698 (2010), the Michigan Court of Appeals upheld the constitutionality of a retroactive amendment to the state’s use tax law. The amendment was enacted in response to a Michigan Supreme Court ruling that new car dealers and vehicle manufacturers were exempt from use tax liability under the state’s sale for resale exemption, despite any interim use to which the vehicles were put pending resale. Betten Auto Center v. Dep’t of Treasury, 731 N.W.2d 424 (2007). While the Betten appeals were pending, GM filed use tax claims with the state in excess of $100 million for time periods going back eleven years to 1996. Following the Betten ruling, the state promptly amended the Use Tax Act to clarify that the interim use of a new vehicle was a “qualifying use” which eliminated the right to claim a resale exemption (Amendment). The Amendment was made effective beginning September 30, 2002 (seven years before the enactment of the Amendment), and for all tax periods not barred by the statute of limitations. The Amendment effectively eliminated GM’s refund claims.

    In its legal challenge to the Amendment, GM argued that the Amendment was unconstitutional on several fronts, including the Due Process Clause of Fourteenth Amendment, the Taking Clause and the Title-Object Clause. GM also argued that the Amendment violated the Constitution’s Separation of Powers Clause by interfering with the province of the State judiciary, and that the Amendment was special purpose legislation designed to eliminate GM’s refund claim. All of these arguments were rejected by the Appellate Court.

    With respect to the Due Process Clause, citing United States v. Carlton, 512 U.S. 26 (1994), the Appellate Court held that it “has almost universally been recognized” that a legislature’s action to “mend a leak” in the public treasury as a result of a judicial decision is rationally related to a legitimate legislative purpose. Addressing the question whether the legislature achieved its legitimate purpose by rational means, the court held that the period of retroactivity was “modest” for four reasons: (1) the Amendment served only to “confirm the application of a tax previously imposed;” (2) GM had not relied to its detriment on the prior language of the Use Tax law (evidenced by the fact that GM was filing claims for refund, not supporting an original return position); (3) the Michigan Legislature had acted promptly to enact the Amendment after the Betten ruling; and (4) there were many other cases affirming similar periods of retroactivity (which the court chose to characterize as seven years, not the eleven years claims by GM). The Michigan Supreme Court and the U.S. Supreme Court denied GM’s requests for higher court review.

    The GM ruling underscores the difficulties that taxpayers face in bringing a constitutional challenge to a taxing statute, even one with a period of retroactivity widely criticized as unfair to taxpayers. The state tax world will watch with interest to see if a successful legal challenge can be raised to the retroactive application of P.A. 282 (the OP's point).

    You Betcha! (3)Nuh Uh.(0)
  3. December 26, 2014 at 7:12 am

    And here's yet another example of where we as a society have allowed court precedent to muddy the plain language of the constitution. Article 1 § 9 Clause 3 and Article 1 § 10 Clause 1 of the United States Constitution, and Article 1 § 10 of the Michigan Constitution, all clearly prohibit ex post facto laws (laws that retroactively change the legal consequences -- or status -- of actions that were committed, or relationships that existed, before the enactment of the law in question). Given that Calder v. Bull, 3 U.S. 386 (1798), is still the governing precedent for legislative end-arounds of the plain language of the constitution (most people with any common sense hold that "shall not" means "shall not"), it's not exactly a surprise that Samuel Chase, to this day the only SCOTUS justice ever impeached, indirectly set the precedent that helped lock in the federal judiciary we have today. It's crap like this that has me upset that the concept of jury nullification isn't a bit more widely known.

    You Betcha! (5)Nuh Uh.(0)
    • Jason
      December 26, 2014 at 7:36 am

      Hmmm.. "Chase the court" kinda has a ring to it.

      You Betcha! (2)Nuh Uh.(0)

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