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Friday, March 13, 2015

Op/Ed: Basic Math on Michigan Proposal 1 of 2015 Ends with Questionable Results

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The shift of Revenue Shell Game of Michigan's Proposal 1 of 2015
is designed to confuse voters just enough into saying Yes to the measure.

Sometimes, Politicians think we are stupid....

That is the best description one can muster for the shell game being played on Michigan residents about efforts to raise the State's Sales Tax from 6% to 7%.

Last weekend, while attending a local informational form on Proposal 1 of 2015 - a measure designed to hike taxes on purchases not related to food at any grocery store chain or independent operator in Michigan - an moment of clarity arose.

If the basic math and surface details of Proposal 1's lead
 to a reasonable conclusion the measure by its core design takes earned revenue away from the coffers of Michigan's lower, middle and working class were not clear as a bell before this moment in time, this hypothesis was quantified in recent conversation with a elected official we shall leave nameless.
IUNT Reporter: Is it possible we could obtain a copy of the PowerPoint Presentation you just gave on Proposal 1? 
Unnamed State Legislative Official: Not if you'll are planning to encourage your readers not to vote for the Proposal. 
IUNT Reporter: Well our personal thoughts on Proposal 1 have nothing to do with providing all the information necessary for potential Michigan voters who read our articles, to make a informed decision about this measure. The PowerPoint would be featured as a stand-alone article on our site, without commentary. 
Unnamed State Legislative Official: Blank Eye Stare
End result of this tepid at best exchange was the Unnamed State Legislative Official repeating their "Talking Points" on Michigan's Proposal 1 of 2015 scheduled for a decision by voters on Tuesday, May 5; and the Elected Leader body langauge of disappointment and verbalized tone anger IUNT would not fall in line with the plan to confuse and complex voters.

Recently elected Senator Gary Peters (D) cited in a February 18th Detroit Free Press article Michigan's Legislative Officials instead of handing a complex Proposal of 11 bills wrapped into one package promising this and increase that, State Elected Leadership should have did the job they are paid to do in Lansing. Make policy decisions and let the rest fall where it may.

"The Legislature should have done their jobs," and passed legislation to raise money to fix the state's crumbling roads and bridges, instead of sending a sales tax proposal to voters," Senator Peters stated in the Detroit Free Press article"What we have is a failure of leadership from the governor and from the Legislature."
Well said, Senator Peters.

What are the core math details on Proposal 1:

The measure by its core design will if passed increase the State Sales or Use Tax from 6% on the dollar to 7%. Let us review how this expansion in revenue to the Michigan Department of Treasury from your pocket would impact a $7000.00 used car purchase using basic mate priniciples.

The Used Car cost $7000.00. Michigan's current is 6% sales tax or .06% for the purchase.

At this rate the vehicle base cost $7000.00 would be with the 6% Sales Tax = $7000.00 x .06 = $420.00 of Sales Tax added to the automobile overall price out the door.

Now, if the $7000.00 used car purchase was subject to a 7% sales tax by passage of Proposal 1 of 2015 = $7000.00 x .07 =$490.00 plus the price of the vehicle.

The amount charged from a 6% to 7% Michigan Sales or Use Tax would be $70.00, not $7.00 or $.70.

Why is this important for you to know? 

Commercials or propaganda marketing spills have began For and Against May 5th - Proposal 1 of 2015. However, in commercials for the proposal an overriding sentiment expressed is this measure will only increase earned income out of Michigan residents pockets by just one cent

As the basic math noted above proves, this is not true.
Think about for a moment if the purchase made was $.60 instead, much less than $7000.00 by any stretch of the imagination. On a .$.60 item at 6% Sales Tax, the purchase would equal 0.036% or using the rounding up to the next whole number scenario $.04, leaving the final total at $.64. Add a 7% Tax to the same item, the cost would be $ 0.042% or the same .04%.

Yet, the more expensive a purchase is, the more citizens are subject to the tax as detailed by the Used Car Purchase of $7000.00 noted above. In other words, Sales or Use Tax increases are Regressive. 

A Regressive Tax, history has shown, hits Lower and Middle Income Citizens at a higher rate, as normally they are subject to make extra purchases on a daily basis subject to the tax.

Now onto a other points about Proposal 1 of importance:

Legislative versus Constitutionally mandated changes in particular and why it is important to know the difference of each of these factors before voting for or against May 5th Proposal 1 Sales Tax Increase.

By the Michigan Constitution, all increases to the Use Tax must be approved by a majority of voters electing to actively participate in a Special or General Election.

Article IX § 26 (In Part)
"There is hereby established a limit on the total amount of taxes which may be imposed by the legislature in any fiscal year on the taxpayers of this state. This limit shall not be changed without approval of the majority of the qualified electors voting thereon, as provided for in Article 12 of the Constitution."
However, changes to provisions on a increase or decrease of revenue as a result of Sales and Use Tax hike, are sole power of the Legislative decision making body controlling Michigan's State House and Senate.

Article IV § 1

"The legislative power of the State of Michigan is vested in a senate and a house of representatives."
Thus, all other of the promised changes by approving Proposal 1 of 2015 including increasing road repair revenue, allotment of funding for Public Schools, hiking Michigan's Earned Income Tax Credit (EITC) and more can be changed by the Political Party in Power by majority vote and approval of the Governor, at anytime.

Proposal 1 also has other Regressive Tax Principles hidden within fine details including an expansion of Michigan's Automobile and Electric Cars annual registration fees averaging initially a hike of $40.00-$135.00 based on value of the vehicle along with a $.19 fee hike on cost associated with the gasoline tax.

Proposal 1 promised Road Repairs can take up to three years or more. Additionally, the ETIC for Michigan's lower earned income workers which was cut from a maximum of $600.00 depending on income, to just $50.00 in 2011 by Governor Rick Snyder signing a legislative measure.

In all the ETIC will only increase to $333.00 or $267.00 from the current ETIC --- leaving the State's Poorest Residents paying more in every other way by sales and use tax purchases, vehicle registration fees and the cost of gasoline.

Back for a brief moment to the Unnamed State Legislative Official.

If this Elected Leader believed by denying IUNT's request for Proposal 1's PowerPoint Presentation would stop us from writing this piece, they were wrong. In all Proposal 1 is very complex instead of extremely simple to understand. Lansing Officials failed to perform basic duties within the positions held and make sound decisions to properly fix our roads.

These decisions include repealing the $1.8 billion dollar 2011 tax cut made to C & S Corporations and allocating all revenue gained from scaling back the unnecessary cut in business taxes to Public Schools, restoring ETIC to index for the cost of inflation and to fix Michigan's crumbing roads.

Adding a series of Regressive Taxes packaged with a red bow in eleven bills to raise revenue is not the right way to counteract problems created by Governor Rick Snyder's signing of 2011 massive giveaway to large businesses. The corporations use Michigan's resources along with average Jane and Joe Citizen, and as a result should pay their fair share.

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