House Bill 4001 would eliminate the state income tax. It could be voted upon this week in the House.
What was once a fringe idea actually could pass this week. Even though proposed to be cut over 40 years, we would all feel the impact immediately. The biggest cuts come right away, slashing $1.8 billion in the first two years.
The Michigan income tax accounts for 75% of the General Fund and 25% of the School Aid Fund (remember we have two big pies in Michigan when it comes to our budget).
Business taxes were cut deeply a few years ago (schools took a $450/child cut that budget year). While the School Aid Fund is supposed to be held harmless, we know that just isn't consistent with history. More items from the General Fund will be moved over to share the school funding pie - resulting in even more cuts than we have already taken over the last decade. When the pressure gets high enough, does anyone think schools will be protected? Given the income tax is the main revenue source for the entire state, the impact would be devastating on all levels.
Some points to ponder:
How long would schools be protected? Current law keeps funds going to our schools the same when the tax rate is cut. Does anyone really think that would last, once the impact of this irresponsible policy became clear?
How would this impact Michigan's children? Public education isn't the only thing we offer to our children. Many services for low-income families are aimed at keeping children healthy and on the right track. When those services get gutted, how can we look at ourselves in the mirror? And can our schools handle the huge burden of children who haven't had good medical care and live in families under huge stresses?
How would we pay for things like roads? The roads package passed a couple of years ago was supposed to start being funded next year. It was passed based, in part, upon "future growth" (ie, more income and other taxes paid if the economy was doing well). How on earth will that be funded now if we are cutting the income tax?
A drastic decline in revenue means big cuts. What else will we lose? Certainly we have a right to know the answer to that question.
Is there a replacement plan for new revenue? The small number of states that do not collect income tax obtain revenue from other sources.
If you would like a roadmap on what this looks like, please Google "Kansas income tax cut." That state has been sent into chaos, with schools running out of money and closing early last year. In fact, there are efforts now to roll back the cuts since they have been so devastating.
This is simply an irresponsible plan pulled together for political grandstanding. There's a reason it was the first bill introduced this year, and it wasn't because the sponsors were focused on what is best for our children and communities.
Michigan Parents for Schools