Media Muddles Magnitude of May Tax Hike Vote

Approximately two billion dollars.

That's how much additional taxes will be collected if voters approve a May 5 ballot proposal, according to a Mackinac Center for Public Policy analysis based on figures projected by Michigan's legislative fiscal agencies.

The bottom-line figure has not been widely reported in the media. In fact, most readers would be hard-pressed to find it in newspapers or in press releases put out by politicians who favor the tax hike measure.

For example, Sen. Jim Stamas, R-Midland, issued a press release that stated: “Last year, the Legislature approved a bipartisan package projected to generate $1.2 billion of additional revenue annually to repair Michigan’s roads and bridges, while providing additional funding to our schools and local governments.”

Stamas and some reporters devote many words to describing the amounts earmarked to various interests if the measure is approved, but their readers will have to do the math themselves to discover how much more the overall package will extract from their pocketbooks.

In one example, when a letter-to-the-editor on the proposal from reader Howard Bouwens Jr. of Laketown Township was posted in the Holland Sentinel, it referred to the measure as an overall $1.9 billion tax hike. That number accurately reflects the initial fiscal agency analyses, which have been revised since to tack on another $100 million.

However, Holland Sentinel Opinion Page Editor Jim Timmermann posted in the comments section of Bouwens’ letter a 250-word response that mentioned only the $1.3 billion collected by the sales tax increase. That left out another $663 million in net gas, diesel and vehicle registration taxes that will be automatically triggered if the ballot measure passes.

In another story an MLive reporter asserted, “In total, it's projected to raise $1.2 billion.” The only hint to readers that the real amount is much higher was a reference to an opponent who “thinks this will end up costing voters about $2.0 billion in increased taxes.”

The figure is not just one man's opinion, however: it's an accurate sum of how much the nonpartisan legislative fiscal agencies estimate the package's new and increased levies will collect. The exact amount depends on unpredictable factors including the future cost of fuel, but even large swings in these would not change the $2.0 billion bottom line very much.

Other media reports have also focused exclusively on the package's $1.3 billion annual increase in transportation spending, leaving it to readers to untangle the many earmarks and individual tax hikes before they can discover how much more citizens will pay in total.

The ballot measure's sales tax increase by itself will collect an additional $1.427 billion. If this is approved it will automatically trigger the imposition of $523.9 million in additional tax increases in the first year, and $663 million when all the fee increases are fully realized. If voters say “no” to the ballot measure these other tax hikes will not go into effect. They include:

• A net gas and diesel tax hike of $463 million. The actual increase will depend on the cost of fuel.
• A $50 million increase in annual truck registration taxes, and elimination of a vehicle registration tax “depreciation” discount that will raise $10.9 million in the first year, and $150 million when fully realized.

This is on top of a $60 million Internet purchase sales tax that goes into effect regardless of the May 5 vote, which was enacted as part of the deal to put the sales tax increase on the ballot. The package also increases state spending by $260 million on low wage household income enhancement subsidies distributed as tax credits, which is contingent on a “yes” vote.

Late last year the Michigan House passed a plan that would have gradually increased road funding by $1.2 billion without raising taxes. The Senate responded with a $1.2 billion gas tax hike for transportation. On the last day of a 2014 lame duck session, in the pre-dawn hours of Dec. 19, the two bodies “compromised” at a net tax hike of $1.9 billion, which further analysis now pegs at around $2.0 billion.

A summary of the proposed tax increases that citizens will be voting on can be found here.