Lansing, Michigan — When Gov. Gretchen Whitmer's State of the State address on Jan. 24 mentioned a proposed payroll tax cut, Rep. Dylan Wiguera cringed at the idea.
The Garden City Democrat told MLive on Thursday that he would not vote for the plan if it goes to the House, slamming the effort as “Reagan-era tax policy.” And in a chamber where Democrats can't afford to lose votes on policies developed solely by their own party, the question is whether the initiative runs into trouble before it can fully take off.
“I'll call them what they are: trickle-down economics,” said Wegela, D-Garden City. “When you give tax breaks to corporations and corporations, you create jobs and that ripples through society as a whole, and that doesn’t work.”
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When asked about possible Democratic backlash to the proposal, Whitmer press secretary Bobby Leddy appeared perturbed, telling MLive: A job that pays. ”
“Governor Whitmer has shown that we can both invest in Michiganders and attract new business to our state,” he said in a statement. “She brought Democrats and Republicans together to pass historic economic development policies that secured tens of thousands of good-paying jobs and invested billions of dollars in the economy.”
High Wage Incentives for Local Employment (HIRE) Michigan announced Wednesday, effectively reviving the spirit of former Gov. Rick Snyder's “Good Jobs for Michigan” program, which ended in 2019. , the name will be changed. This effort has the support of the Michigan General Assembly, both chambers of Congress. It is under Democratic control and aims to lower payroll taxes for small businesses.
A bill establishing the program It passed the Senate Economic and Regional Development Committee in October. Under the law, eligible businesses can continue to withhold up to 100% of their income taxes from new hires, provided they maintain a certain number of jobs at a specified median wage. Businesses will now be able to earn $100 million a year instead of the previous program's limit of $200 million a year.
“For Michigan to remain competitive, we need tools to help Michigan businesses grow and relocate,” said Sen. Sam Singh, D-East Lansing, a co-sponsor of these Senate bills. said. “If you look at the states around us, almost every state has a tax collection program like the one created by Michigan's HIRE bill. And to remain competitive, we need to do so.” there is.”
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But for Weguera, a progressive member of the House Democratic Caucus, the fact that other states have introduced similar programs isn't enough reason for Michigan to follow suit. He said these bills do not provide a “long-term solution” to job creation in Michigan and that the repeated HIRE program is not working.
“We've been giving tax cuts and breaks to companies like Ford and GM, and they either renege on their promises, don't create the jobs they promised, or just leave it alone.” year,” Weguera said.
This is not a view held only by some Democrats. In a statement ahead of Whitmer's speech, groups such as the Mackinac Center for Public Policy, a nonprofit research and education organization, criticized the proposal as simply “giving handouts to select companies.”
Support for state aid for big business has long been divided, with more progressive Democrats and hardline conservative Republicans typically uniting to oppose the move. If Democrats lose even one vote, they would have to concede the program's highlights to Republicans or commit to voting for other conservative-backed legislation if they return to a 56-54 split House in April. may occur.
This was seen earlier this term when the Legislature chaotically approved a Democratic-proposed tax cut plan that included deposits into the state's Strategic Outreach and Attraction Reserve (SOAR) fund.
Because of the SOAR component, Weguera gave the motion a resounding “no,” meaning Democrats would need more votes than Republicans to pass it through the chamber. The final outcome came after hours of negotiations and reports that Democrats offered incentives to Republicans to pass the bill.
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But that's something the Whitmer administration may have already explained, said Adrian Hemond, CEO of consulting firm Grassroots Midwest. He said this would likely be one of the most difficult policies for Democrats to achieve, and that the resistance to the idea was not unexpected. In that regard, horse trading shouldn't be unexpected either.
“It's up to the governor and Democratic leadership to decide how much to donate,” he said. “I don’t think this will lead to a broad agreement with Republicans on the tax code…and it makes sense as a negotiating strategy.
“Rather than trying to negotiate with (House Minority Leader) Matt Hall and (Senate Minority Leader) Aric Nesbitt, what would you have to sacrifice to negotiate with a few (Republican) people? If you think about it, it’s a lot cheaper.”
Rep. Brian Posthumus, R-Cannon Township, said it's already conceivable that Republicans in his caucus will oppose the plan, even with the bare bones of Snyder-era policies. That's not just because the measure benefits businesses, but because it doesn't provide broad enough tax relief.
There are widespread concerns among House Republicans about the governor's approach to economic development, with House Republicans calling the governor's efforts a piecemeal project designed for jobs announcements rather than a comprehensive strategy for growing Michigan's economy. It is regarded as a program. As a result, many Republican lawmakers are unlikely to support the bill as it stands.
“I think there will be support from Republicans, but ultimately there should be more emphasis on broad tax cuts,” Posthumus said. “We need to focus on keeping people in Michigan. … Income tax relief for everyone in Michigan, not just certain businesses or certain people, and overall Why not offer tax relief? We need to get beyond picking winners and losers and make our entire environment better for everyone.”
Rep. Joey Andrews (D-St. Joseph) also said he was “not particularly excited about the idea of a payroll tax cut” when he heard Whitmer pitch the idea during a speech. Andrews did not support reimplementing Snyder-era policies in the first place, but argued that with Michigan's relatively low unemployment rate now is the time to save money by not allowing further tax cuts. .
“It's clear that economic development is important,” he said. “We want to be a competitive state, we want to grow, and that's all very good things. … It seems to me why we need to lower payroll taxes when the unemployment rate is already this low. I just don't understand it. I understand the logic, because when unemployment is high, you want to encourage employers to hire people. When unemployment is bad, I feel like the opposite is true.”
Unlike Wegela, Andrews declined to say whether he would vote for the bill. Rather, he said tax cuts are “always worth talking about,” especially when they can benefit “working families and the general public to the extent possible.”
Asked if he had concerns about a vote on Michigan's HIRE program that could take place later this year, Quentin Messer, CEO of the Michigan Economic Development Corporation, said he believes lawmakers “will not have a solution.” “There should be room to think about new measures,” he said.
“Humans are learning creatures, and so are members of Congress and elected officials,” he said. “We're doing our part to make sure we provide learning opportunities, so let's give them some room to negotiate.”
