GOP Governor Asks Voters to Raise Their Own Taxes

GOP Governor Asks Voters to Raise Their Own Taxes

By Rob Garver

Michigan voters go to the polls today to vote on Proposal 1, a referendum that would hike the state sales and gasoline taxes. An unexpected twist in the story, though, is who is backing the plan and why. Support for the proposal speaks to the declining state of infrastructure in the U.S. and the increasing urgency with which states are taking matters into their own hands.

Proposal 1 is a complex mix of policy changes that would raise more than a billion dollars to fund road construction and repair, plus hundreds of millions for education and other purposes. It would do so by hiking the Michigan state sales tax from 6 percent to 7 percent. That represents a 17 percent increase in total sales taxes Michiganders will face on taxable items.

Related: America’s Energy Infrastructure in Desperate Shape

However, the bill also abolishes the sales tax on gasoline – Michigan is one of the few states in which gas is not exempt from state sales tax – and would dramatically increase the wholesale gasoline tax. The net effect, according to the Detroit Free Press, would be an increase of between 7 and 9 cents per gallon in what consumers pay at the pump. The proposal would net about $1.9 billion per year for the state’s coffers, the majority of it coming out of the pockets of Michigan’s taxpayers. (A small percentage would come from out-of-state visitors paying taxes on items purchased in Michigan.)

Normally, a $2 billion tax hike – the biggest in the state in a generation – would be the sort of thing Republican politicians would attack mercilessly, but in Michigan, Republican Governor Rick Snyder is a strong proponent of the deal. And Snyder isn’t alone. Prominent Republican and Democratic lawmakers have thrown their support behind the measure.

Related: Get Ready to Pay More Tolls If Infrastructure Isn’t Funded

The move also has significant support from the business community. Unsurprisingly, the biggest backers of the deal are the construction companies and related industries. But there is also support in the general business community, even among some companies whose products would be more expensive.

Even with substantial support from legislative leaders and businesses, though, the prospects for Proposal 1 looked poor heading into the vote today Public opinion remains generally against the proposition despite a multimillion-dollar advertising campaign by supporters that has dwarfed efforts by the opposition.

Should the vote fail, though, the state’s pothole-pocked roads and crumbling bridges won’t fix themselves, so legislators will have to find the revenue somewhere, either by increasing taxes via a different route, or cutting spending from an already tight state budget.

Chart of the Day: Dem Candidates Face Their Own Tax Plans

Senator Bernie Sanders, former Vice President Joe Biden and Senator Elizabeth Warren participate in the 2020 Democratic U.S. presidential debate in Houston
By The Fiscal Times Staff

Democratic presidential candidates are proposing a variety of new taxes to pay for their preferred social programs. Bloomberg’s Laura Davison and Misyrlena Egkolfopoulou took a look at how the top four candidates would fare under their own tax proposals.

Quote of the Day: The Health Care Revolution That Wasn’t

Benis Arapovic/GraphicStock
By The Fiscal Times Staff

“The fact is very little medical care is shoppable. We become good shoppers when we are repeat shoppers. If you buy a new car every three years, you can become an informed shopper. There is no way to become an informed shopper for your appendix. You only get your appendix out once.”

— David Newman, former director of the Health Care Cost Institute, quoted in an article Thursday by Noam Levey of the Los Angeles Times. Levey says the “consumer revolution” in health care – in which patients shop around for the best prices, forcing doctors, hospitals and pharmaceutical firms to compete with lower prices – hasn’t materialized, but the higher deductibles that were part of the effort are very much in effect. “High-deductible health insurance was supposed to make American patients into smart shoppers,” Levey writes. “Instead, they got stuck with medical bills they can't afford.”

Congressional Report of the Day: The US Pays Nearly 4 Times More for Drugs

A pharmacist holds prescription painkiller OxyContin, 40mg pills, made by Purdue Pharma L.D.  at a local pharmacy
REUTERS/George Frey
By The Fiscal Times Staff

The House Ways and Means Committee released a new analysis of drug prices in the U.S. compared to 11 other developed nations, and the results, though predictable, aren’t pretty. Here are the key findings from the report:

  • The U.S. pays the most for drugs, though prices varied widely.
  • U.S. drug prices were nearly four times higher than average prices compared to similar countries.
  • U.S. consumers pay significantly more for drugs than other countries, even when accounting for rebates.
  • The U.S. could save $49 billion annually on Medicare Part D alone by using average drug prices for comparator countries.

Read the full congressional report here.

Chart of the Day: How the US Ranks for Retirement

Ken Bosma / Flickr
By The Fiscal Times Staff

The U.S. ranks 18th for retiree well-being among developed nations, according to the latest Global Retirement Index from Natixis, the French corporate and investment bank. The U.S. fell two spots in the ranking this year, due in part to rising economic inequality and poor performance for life expectancy.