MI Senate “Class Warfare” Exposes Political Class Ignorance

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The Michigan Business Tax provides a lower tax rate for small businesses with annual gross receipts of less than $20 million and business income of less $1.3 million. Eligibility also requires a firm to cap earnings distributions to an owner in any given year at $180,000.  

Last week the Senate passed Senate Bill 69, which among other things would raise that compensation cap to $210,000. This triggered a sad class-warfare debate that showed how disconnected the political class is from business realities.

 

The key point of ignorance demonstrated by both sides was characterizing the income a small business owner derives as equivalent to assembly line wages – a fixed amount collected year-in, year out, just for showing up.

 

Anyone who has ever owned or been involved in a small business would be appalled by such ignorance. The reality is that most small business owners live on an income roller-coaster. Several years may go by with losses or minimal earnings, followed by one sunshiny year during which they better make hay.

 

Oh, but the redistributionists in the Michigan Senate can’t have that! Snarked Sen. Mickey Swiatalski, D-Roseville, “This bill would have us believe that people are hurting out there, and they can’t make it on $180,000.”  Sen. Gilda Jacobs, D-Huntington Woods, echoed Swiatalski’s contempt: “I still think $180,000 compensation is something that probably all of us could live on.”

 

What these business experts ignore is that a firm may well have been scraping by with just $10k or $20k in earnings for a few years, or losses, and owners know that one fat year is no guarantee against several lean ones in the future.

 

I suppose that’s the kind of thing one expects from left-leaning liberals – at least they’re honest about their beliefs, and don’t pretend to know very much about business or economics. What was so frustrating was that those on the other side appeared to be equally clueless about the “ridin’ high in April, shot down in May” realities of running a small business. The best they could do was summon outraged accusations of “class warfare!” (duh), or throw out a red herring like the lack of complaints from the other side about the compensation of Hollywood producers benefitting from state film subsidies.

 

Laughably, the Senator who resorted to the latter voted for the economically absurd film subsidies. :rolleyes:

 

Read the various floor statements from this sad “debate” on the MichiganVotes Forum (and post your own comments too while you’re there).

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2 Responses to “MI Senate “Class Warfare” Exposes Political Class Ignorance”

  1. Bruce Says:

    Jack:

    Having a small business I can verify the “make do in leaner times” scenario. Still waiting for a “full paycheck” to come across my desk. Making payroll, marketing the business, paying vendors, rent, etc etc. I’d love to have a real job like, say, a state representative or Governor. How much does the “First Gentleman” make?

  2. Leon Drolet Says:

    Bruce, how DARE you ask how much the First Gentleman makes! And please do not dare ask how many full-time staffers the First Gentleman has or what they actually do for taxpayers. The Michigan Taxpayers Alliance was stupid enough to ask such questions in a Freedom of Information Act request to Governor Granholm over a year ago. The Gov replied that the Office of the Governor is specifically exempt from the FOIA. In other words, “send us your money, then shut up and mind your own business”.

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