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Detroit Regional Chamber to Campaign Against Push to Hike State Corporate Income Tax to Fix Roads

From: Crain’s Detroit Business

By Lindsay VanHulle

August 17, 2015

The Detroit Regional Chamber is challenging a union-backed ballot initiative to raise Michigan’s corporate income tax to pay for roads by discouraging voters to sign the group’s petition.

The chamber’s “decline to sign” campaign is in response to a petition drive by a campaign committee called Citizens for Fair Taxes that would nearly double the state’s flat corporate income tax — from 6 percent to 11 percent — to raise at least $900 million toward road repairs.

Lobbyists for the Detroit chamber say the proposal would create a disincentive for companies to move to Michigan after Gov. Rick Snyder’s administration restructured the state’s business taxes shortly after he took office.

“You can’t fix this (roads) problem by creating a new one,” said Brad Williams, the chamber’s government relations vice president. “This proposal is going to create a huge one.”

Snyder eliminated the Michigan Business Tax in 2011 and replaced it with the flat 6 percent business tax, which is charged only to C corporations and not to small businesses.

Proponents of the tax overhaul say it has improved Michigan’s business-friendly reputation and contributed to the creation of hundreds of thousands of private-sector jobs and a drop in unemployment.

“Businesses have many choices” on where to locate, Williams said. “If this goes through, Michigan’s going to be a less-desirable choice.”

Citizens for Fair Taxes, which has support from labor unions, believes the higher corporate tax would recoup some of the money given to business in tax incentives and evenly spread the road-funding burden among all road users.

The group has 180 days to collect more than 250,000 signatures in order to submit its petition to the Legislature. If lawmakers don’t approve it, the proposal would appear on the November 2016 ballot and Snyder could not veto it.

“This effort by corporations and their lobbyists shows they are desperate and will do just about anything to keep the $2 billion they get every year in tax breaks, even when they fail to create the promised jobs,” said Tom Lutz, spokesman for Citizens for Fair Taxes, in a statement. “Attempting to silence and intimidate signature (gatherers) and signers shows they know they cannot win on the issue because Michigan’s middle class families are tired of picking up the tab so corporations can pay less.

“Corporations profit from our roads and they should help maintain them. It’s that simple.”

The Legislature has yet to vote on a road-funding deal that would raise at least $1.2 billion needed to fix the state’s existing roads and bridges. Variations in the House and Senate plans would draw on existing revenue, higher diesel and regular fuel taxes, and increased registration fees.

Williams said the chamber supports raising the diesel tax to match the state’s 19-cent tax on regular fuel and says businesses would contribute more to roads under a deal that raises fuel taxes and registration fees.

“In both those instances, businesses — whether they have trucks or a car fleet — are paying their fair share,” he said.

The campaign will be paid for by the chamber’s Powering the Economy super PAC. Williams said the amount spent on the effort thus far is “negligible;” it includes a page on the chamber’s website.

He could not estimate how much the chamber expects to spend on the communication effort.

The chamber paid its super PAC slightly more than $274,000 in the quarter ending July 20, according to campaign finance reports filed with the state. This year, the PAC has received more than $410,000 in contributions.