GOP Governor Asks Voters to Raise Their Own Taxes
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: Why US Fertility Rates Are Falling
U.S. fertility rates have fallen to record lows for two straight years. “Because the fertility rate subtly shapes many major issues of the day — including immigration, education, housing, the labor supply, the social safety net and support for working families — there’s a lot of concern about why today’s young adults aren’t having as many children,” Claire Cain Miller explains at The New York Times’ Upshot. “So we asked them.”
Here are some results of the Times’ survey, conducted with Morning Consult. Read the full Times story for more details.
A Record Low 47% of US Adults Say They're 'Extremely Proud' to Be American
Gallup says that, for the first time in the 18 years it’s been asking U.S. adults how proud they are to be Americans, fewer than half say they are "extremely proud." Just 47 percent now say they’re extremely proud, down from 70 percent in 2003.
Another 25 percent say they’re “very proud” — but the combined 72 percent who say they’re extremely or very proud is also the lowest Gallup has recorded. Pride levels among liberals and Democrats have plunged since 2017. Overall, 74 percent of Republicans and just 32 percent of Democrats call themselves “extremely proud” to be American.
Pfizer Has Raised Prices on 100 of Its Products
Weeks after President Trump said that drugmakers were about to implement “voluntary massive drops in prices” — reductions that have yet to materialize — Pfizer has raised prices on 100 of its products, The Financial Times’s David Crow reports:
“The increases were effective as of July 1 and in most cases were more than 9 per cent — well above the rate of inflation in the US, which is running at about 2 per cent. … Pfizer, the largest standalone drugmaker in the US, did decrease the prices of five products by between 16 per cent and 44 per cent, according to the figures.”
Crow notes that Pfizer also raised prices on many of its medicines in January, meaning that some prices have been hiked by nearly 20 percent this year. The drugmaker said that it was only changing prices on 10 percent of its medicines and that list prices did not reflect what most patients or insurers actually paid. The net price increase after rebates and discounts was expected to be in the “low single digits,” the company told the FT.
Chart of the Day: Pass-Through Tax Deductions Made Easy
The Republican tax overhaul was supposed to simplify the tax code, but most experts say it fell well short of the goal. Martin Sullivan, chief economist at Tax Analysts, tweeted out a chart of the analysis required to determine whether income qualifies for the passthrough tax deduction of 20 percent, and as you’ll see, it’s anything but simple.
A Conservative Bashes GOP Dysfunction on Spending Cuts
Brian Riedl, a senior fellow at the conservative Manhattan Institute, offers a blistering critique of congressional Republican’s problems cutting spending:
Since the Republicans took the House in 2011, nearly every annual budget blueprint has promised to balance the budget within a decade with anywhere from $5 trillion to $8 trillion in spending cuts. And yet, you may have noticed, the budget has not moved towards balance. This is because the budget merely sets a broad fiscal goal. To actually cut spending, Congress must follow up with specific legislation to reform Medicare, Medicaid, and all the other targeted programs. In reality, most lawmakers who pass these budgets have no intention whatsoever of cutting this spending. As soon as the budget is passed, the targets are forgotten. The spending-cut legislation is never even drafted, much less voted on.
The annual budget exercise is thus a cynical exercise in symbolism. Congress calculates how much spending must be cut over ten years to balance the budget. Then they pass legislation setting a goal of cutting that amount. Then they move on to other business. It’s like a baseball team announcing that they voted to win the next World Series, and then not showing up to play the season.
Read the full piece at National Review.