Candidates Talk Taxes In Initial Gubernatorial Sparring

Story from Crain's Detroit Business

MACKINAC ISLAND -- In an exchange long on civility and sometimes short on specifics, Michigan gubernatorial candidates on Thursday made pitches of tax-cutting, government restructuring and budget fixes to business executives gathered on Mackinac Island.

The candidates, appearing at a fundraiser for the Detroit Regional Chamber’s political action committee, sought to distinguish themselves in an early skirmish for the 2010 governor’s race.

Michigan Attorney General Mike Cox said he was focused on “what kind of Michigan will attract and retain jobs.” He said he would cut the Michigan Business Tax in half, roll back Michigan’s 2007 income-tax increase and institute an additional $600 million in MBT reductions – adding up to a $2 billion tax cut that he said he would “do the first thing” when taking office.

Cox said Michigan must look at what it does in the wake of auto industry bankruptcies and restructuring, and said “we have to make ourselves attractive to business.”

Other candidates also hit on taxes; Secretary of State Terri Lynn Land said Michigan needs to address its tax structure, and U.S. Rep. Peter Hoekstra, R-Holland, said Michigan needs to reduce taxes and make the tax system fairer and simpler.

Cox was the only candidate to support a no-tax-increase pledge; others, like state Sen. Tom George, R-Kalamazoo, indicated such a pledge was ill-advised in light of the fact that no one knows what the future holds for Michigan.

Tax incentives got attention, with George saying “total disarmament” against other states would be a mistake, but items like Michigan’s 42 percent film credit need change.

State Rep. Alma Wheeler Smith, D-Salem Township, said “what we need for all the businesses in Michigan is to create a level playing field…not pick winners and losers.” She said Michigan needs to examine its tax exemptions.

Hoekstra said most important is that Michigan has a tax structure that allows all of its industries to thrive. Cox said “tax policy matters” and said that lowering taxes overall would give “everyone the opportunity to prosper.” Land said she would simplify the MBT and “make it better for our state.”

Linking a part-time Legislature to expanded term limits drew various opinions. Smith said a part-time Legislature “would put more power in the governor’s office” and take it away from citizens, but she said she would support a change in term limits.

Hoekstra said he originally supported term limits but has changed his mind, and said he does not support a part-time Legislature. Cox, who said he voted against term limits, said he would also probably vote against a part-time Legislature.

Land said she supports term limits but believes more in “time limits” – setting a specific amount of days in which the Legislature must do its job.

George, a practicing anesthesiologist, said he would favor a part-time Legislature because it “gives people an opportunity to serve and still have their hand in another profession, career.”

In the area of bringing Michigan’s state budget under control, George targeted controlling the state’s health care spending. Cox said savings could come through requiring state employees, whom he said have the some of the richest health care benefits in the country, to pay more of their insurance premium, going from a current 5 percent to a national average of 23 percent of premium.

Smith hit on corrections, although she added that Michigan won’t balance its budget through the corrections department. But several candidates were wary of a plan to release 3,400 inmates by this fall, saying doing so should be done with caution and discretion and should not be driven as a budget decision.

As for replacing Michigan’s 19-cent gas tax with a percentage tax on the wholesale price of gas as a means to raise money for Michigan roads and bridges, candidates were mixed. George said he would not support it, while Smith said she supported the shift in concept. Hoekstra said he would not support it if it increased taxes overall, and Cox said he would instead look at using Michigan’s sales tax for additional road funding.

In closing remarks, Cox said he’s “willing to do the bold things that are needed to change Michigan around.” Land said her time as secretary of state gives her “background and ability to take on this challenge,” while George said “having legislative experience is going to be important in the next governor.”

Smith cited her years of elected experience and service on state appropriations committees as important qualities, while Hoekstra said he would be a governor who puts “everything on the table” to turn the state around, including tackling bureaucracy and taxes.

Ann Arbor business executive Rick Snyder, who was at the chamber’s Mackinac Policy Conference but declined to participate in the debate as he has not decided whether to enter the race, said he would “look at state government from the bottom up,” tackling services, regulations, tax structure and other elements.

“We need smaller, faster, cheaper, better government,” said Snyder, who is exploring a Republican run for governor. He is chairman and CEO of venture-capital firm Ardesta L.L.C.