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Wednesday, March 16, 2011

Republican lunacy in Michigan - screw everyone except corporations

Michigan has had more than its fair share of problems over the past few years. The result was Republicans were swept into power in last years elections. Enter their new governor, Rick Snyder to the rescue.

He began by doing something that should be talked about a lot more and that is strategic tax increases to reduce deficits. With the support of the GOP controlled state legislature he did just that, passing a tax increase that will increase state revenue by $1.7 billion, going against every Republican credo. Except that virtually all the tax increases are on senior citizens and low income earners. Seniors will now pay almost 5% in taxes on pensions, something they had previously been exempted from. The Republicans also eliminated a $600 child tax credit as well as the earned income tax credit creating a situation where low income people in Michigan will now pay a higher tax rate than the wealthy.

In the same bill the |Republicans slashed corporate taxes by 86% costing the state about $2 billion so the net result is an increase in the state deficit of about $300 million. This poses a very simple economic problem. Corporations don't grow and invest because they necessarily pay less taxes but because demand increases. With $1.7 billion less to spend and a relatively moribund economy how are Michigan's corporations going to grow?

For Snyder and his merry band of reverse Robin Hoods this was only the beginning. They also made Snyder king and emperor. The state legislature passed a law creating a 'fiscal martial law' which would allow the governor to void any state contracts including collective bargaining agreements. The bill will also allow the governor to place any city, town or educational body under a fiscal emergency and dismiss all elected officials and dissolve the entity. Theoretically Snyder can dismiss all elected officials in a city such as Detroit and even dissolve the city itself. He can then appoint an administrator who can be from the private sector and in essence privatize an educational system or even a city. He can also terminate any contract that any of these entities including the state have entered into.

Never mind the constitutional aspects of such a law, it could lead to a situation where no company would enter into any sort of contract with a government entity in the state for fear that it could be unilaterally terminated due to a 'fiscal emergency' that the governor can declare.

The rampant idiocy governing the Republican Party these days is quite amazing. If there is anything to smile about it's that the party has and is exhibiting a remarkable ability to overreach and the backlash is and will be considerable.

If there is anything to be hopeful about, it's that the law will more than likely be thrown out in court although with the courts these days one can never be entirely sure of anything.

Think Progress has more on the situation in Michigan here.

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