Citizens Call on Dillon: Close Unfair Loopholes, Put People before CEOs

LANSING, MI – Citizens today called on Speaker Andy Dillon to immediately shut unfair corporate loopholes that pad corporate profits without creating jobs, but rob Michigan families of vital funds to pay for schools, police, fire and other important services. Legislation to close corporate loopholes were introduced earlier this year, yet no action has been taken on this important move that can provide much-needed revenue that will protect Michigan families and businesses.

“There are loophole-closing bills in the House that would move us toward solving the budget deficit without gimmicks or robbing the School Aid Fund. Speaker Andy Dillon has it within his power to get this legislation onto the floor and the savings into the House’s proposed budget. We are calling on him to act on these bills and demonstrate his commitment to our citizens instead of the special interests,” said Patrick Schuh, spokesman for A Better Michigan Future, a coalition of more than 40 organizations representing 2 million Michigan citizens. “To build a stronger Michigan future and reform our broken budget, we must close corporate loopholes that throw away taxpayer dollars without creating jobs. Michigan families and businesses have waited long enough, and they deserve immediate action that can bring real relief to our state.”

A Better Michigan Future has been highlighting unfair corporate loopholes that have benefited corporations for years, sometimes decades, without creating Michigan jobs. Those loopholes include:

• A loophole that will rob Michigan of $18 million this year by exempting big corporations and others who make international phone calls. While phone calls within Michigan and to other states are taxed, phone calls to other countries are not. House Bill 5419 would eliminate this loophole.
• An outdated Big Oil giveaway that robs Michigan taxpayers of millions of dollars every year. A 1929 Michigan law and a 1979 amendment benefit corporations and people who own oil wells producing fewer than 35 barrels a day by allowing them to pay a lower tax rate of 4 percent. House Bill 4487 would amend the outdated law and set the tax rate for all oil well owners at 6.6 percent. When the old rate of 4 percent was set, crude oil sold on the open market for around $13.55 a barrel. Today, the price is $82 a barrel. At that rate, a single well producing 35 barrels a day would generate more than $1 million in revenue a year. House bill 4417 would eliminate this loophole.

Michigan faces an estimated budget deficit of $300 million in the current fiscal year and $200 to $300 million for FY2011 under the proposed budget from the state House. In 2009, Michigan gave away $35 billion in tax giveaways – five times the state’s general fund.

ABMF also supports other meaningful reforms that can fix Michigan’s broken budget, including:

• Implementing a graduated income tax: Michigan is one of only seven states with a flat-rate tax. Michigan must modernize its tax code to ensure fairness and equity, while offering a tax cut to 90 percent of Michigan families and generate $600 million a year.
• Auditing government contracts: Performance audits on $16 billion of government contracts, with an eye toward efficiencies, can reduce wasteful spending and ensure that Michigan taxpayers get the most value for their dollar.
• Modernizing the state’s sales tax: Michigan’s current sales tax is based on the old economy. Michigan must expand the sales tax to include services and luxury items to ensure stable revenue into the future, a move that could generate more than $1.6 billion a year.