According to research by the National Priorities Project on how the federal government spends tax dollars from Michigan, spending on military, health, and interest on the debt consume two-thirds of every income tax dollar spent.
In honor of Tax Day, the National Priorities Project has released a new breakdown of how the federal government spent the average household’s 2006 tax payment. In Michigan and around the United States, nearly 40 cents on every dollar goes to pay for future and past military expenses, while social spending on issues such as education, housing, and nutrition receive pennies.
According to a breakdown on how the federal government spends tax dollars from Michigan, spending on military, health, and interest on the debt consume two-thirds of every income tax dollar spent. Of the $3,936 in federal income taxes paid by the median income family in Michigan, $1,069 went to the military and $358 went towards interest on the debt for military related expenses. A further $132 goes to pay for veterans’ benefits and healthcare. Non-military interest payments accounted for $405. Money spent on health accounts for $821, not because of an abundance of health-related programs, but instead because of “rising medical costs and increasing benefits for seniors” even as “the number and percentage of uninsured Americans continues to rise” according to the National Priorities Project. Spending on preventive health measures such as nutrition programs, accounts for only $103 of the federal income tax dollars paid by Michigan residents. “Income Security” (SSI, tax credit programs, TANF, and other spending aimed at families) received only $236 while spending on Education accounted for $179. Housing, Natural Resources, and Job Training all accounted for under $80. In addition to this statewide breakdown, the National Priorities Project offers an “Interactive Income Tax Chart” that allows taxpayers to determine how much of their tax dollars have gone to military spending.
Highlighting the amount of income tax money spent for military purposes has been an approach used for years by groups challenging the militarism, including the War Resisters League. The War Resisters League releases a pie chart each year outlining the percentages of tax dollars that go towards military spending and offers it as an educational resource. Many groups have used the pie chart flyers in leafleting actions on Tax Day. Groups such as the National War Tax Resistance Coordinating Committee have encouraged more significant forms of resistance and have provide counseling and support for individuals that chose not to pay taxes out of opposition to militarism. The movement cites Henry David Thoreau, who refused to pay taxes as a protest against the Mexican War and slavery in the 1840s, as one of its most famous proponents.
This year, antiwar activists are once again using the connections between tax dollars and military spending as a way to challenge the ongoing Iraq War. Amy Goodman, host of Democracy Now, has written a widely circulated column titled “Hang Up on War,” that outlines the history a telephone tax first instituted in 1898 to pay for the Spanish-American War. The Internal Revenue Service (IRS) has since decided to drop the tax, and this year is offering a “telephone tax rebate” of between $30 to $60 dollars, which Goodman urges people to claim as a way of helping to “defund the war.” In addition, the antiwar group Code Pink is taking advantage of Tax Day as an organizing tool to promote their “Don’t Buy Bush’s War” campaign and is encouraging activists to distribute “receipts” to taxpayers for the war on Tax Day.
In Media Mouse contributor Jeff Smith’s latest column for Recoil Magazine, Smith looks at how the media covers “tax season” each year and the questions that they fail to ask about tax policy. Among the questions that go unexamined are why corporations get such large tax breaks or why municipalities receive a smaller percentage of tax revenue than the military. Smith writes:
Over the next few weeks the news media, as if does every year at this time, produce stories of how so many Americans are procrastinators when it comes to doing their taxes. The TV stations will run footage of cars lined up in front of the post office waiting to drop off their tax documents or maybe they’ll even have a “certified tax specialist” who tells people that it’s always best to have a professional do your taxes. Generally that is the extent to “Tax Day” coverage. So what is missing for the news about taxes and tax policy in the US?
Read Smith’s “Death and Taxes at 11pm tonight — how the news media limits debate”
On Tuesday, several community groups held a forum titled “Tax Policy, Michigan’s Budget & the Future of Michigan’s Economy” to hear two speakers and to brainstorm strategies for cutting costs at the state level.
On Tuesday several local groups (Kent County RICC, Disability Advocates of Kent County & GRACE/West Michigan Call to Renewal) hosted a forum entitled “Tax Policy, Michigan’s Budget & The Future of Michigan’s Economy.” About 50 people were in attendance to hear two speakers and to come up with ideas on ways to cut costs at the state level. The forum comes on the heels of Governor Granholm’s announcement of her proposed budget plan.
Tom Clay with the Citizen’s Research Council addressed the crowd first. The CRC is a non-profit, non-partisan group, which publishes reports on a variety of social indicators in the state, with an emphasis on the economy. Clay gave a Power Point presentation on the current status of Michigan’s economy. He said that Michigan is in its 7th year of spending cuts and that this year’s budget with the budget is smaller than it was 11 years ago. Clay said that Michigan has a structural deficit and that the state will not grow out of the current economic depression. Michigan’s economy is 50th in personal growth income, 50th in unemployment rate, 50th in employment growth, and 50th in Index of economic momentum.
Clay talked a bit about the factors for the budget problems such as the flight of both the auto industry and office furniture manufacturing jobs, the incremental decline of a business tax, and the growing costs of the prison system in the state. The declining business tax seems to be a major contributing factor, since there has been a decline in the percentage of business’ share of state and local taxes, which has dropped from 43% in 1990 to 37.9% in 2005. Even before the elimination of the Single Business Tax, Michigan ranked number 36 in states with high business taxes. If the Governor allows the SBT to go away without a replacement, Michigan would be the lowest state for business tax in the nation.
I asked Tom Clay to what degree trade policies have impacted not only job loss but also state revenues. He said, “the CRC has not looked at this issues, but without question NAFTA caused jobs to go to other places and has had a major effect on the Big 3 automakers.”
This writer was not able to stay for the afternoon session, which featured Louis Glazer, Michigan Future, Inc., presented the findings and recommendations of A New Agenda for A New Michigan, an agenda aimed at attracting “smart people with talent” who are the key to our state’s future economic success. This agenda promotes an “investment in higher education, build regions that attractive places for people to live, attract export business investment, align K-12 education with a knowledge-driven economy, and new leadership, particularly at the metropolitan level.” The report offered no critique of how the private sector and corporations have contributed to the state’s economic decline and in many ways, the only information presented that suggested that the business community is in any way responsible for the economic decline was the mention of the SBT. There was also no coverage of this forum by the major local news outlets.
A new study by the community organizing group ACORN has found that across the country millions of eligible low-income houses are not filing for the Earned Income Tax Credit (EITC) and are missing out on billions of dollars in assistance. In Grand rapids, an estimated fifteen to twenty percent of eligible households are not filing for the EITC.
A new study titled “Missing Millions” by the nationwide community organizing group ACORN has found that across the country low-income residents are missing out on millions of dollars in money from the Earned Income Tax Credit (EITC) program. The organization estimates that between 4,095 to 7,735 households in Grand Rapids are not receiving the EITC. The study describes the EITC as “the largest and most effective poverty reduction program” in the United States, citing its role as a tax benefit for working low-income people that lifts as many as 5 million eligible families over the poverty line each year. ACORN explains that a typical a full-time worker making $7.50 an hour (well above the federal minimum wage of $5.15) earns only $15,600 a year. If the worker has three children they qualify for the maximum EITC benefit of $4,536, which effectively increases their income by 29% and raises them above the federal poverty line. The study asserts that while 21 million families received the EITC in 2005, there are an estimated 3.8 million eligible households that did not receive the credit and therefore missed more than $7 billion in assistance.
In Grand Rapids, the EITC has provided critical assistance to 23,206 households according to a review of 2002’s tax filings by ACORN. Those households received a total of $39.6 million. Despite this, an estimated fifteen to twenty five percent of households eligible for the EITC did not file for it, therefore missing out on as much as $7 million in assistance. The study further explains that while there was a loss of $7 million directly, the actual loss in low-income neighborhoods is closer to $10.5 million. Economists have suggested that every dollar received by low-income and moderate-income families has a “multiplier effect” of 1.5 to 2 times the original amount in terms of money being spent at the local level.
To compound the problem, many low-income families turn to a variety of private tax companies offering services such as Refund Anticipation Loans (RALs), Refund Anticipation Checks (RAC), and Assisted Direct Deposit that produce substantial profits for tax preparation companies and the banks that they work with at the expense of low-income tax payers. Such services are often aggressively marketed to low-income communities and charge inflated fees for their services. In Grand Rapids, ACORN found that in 2002 34% of EITC recipients used high cost tax preparation services resulting in as much as $1,032,200 being lost in fees to tax preparation companies. Of course, the problem of predatory tax companies and lenders extends beyond those who qualify for the EITC, with 11,526 low-income households in Grand Rapids–defined as having an adjusted gross income below $34,138–losing $1,498,380 in fees to tax preparation companies in 2002.
In response, ACORN’s Grand Rapids chapter is launching a grassroots door-to-door outreach campaign to help families obtain the EITC. The organization has opened a free tax preparation center to further facilitate this process and to prevent predatory tax preparation companies from making money off low-income families. In addition to assistance in filing, the service also offers electronic filing and direct deposit. The tax services are located in the ACORN office at 441 S. Division and is open Tuesdays through Thursdays from 4:00pm to 7:30pm, Fridays 2:00pm to 5:30pm, and Saturdays from 10:00am to 1:30pm.
A new report by the National Women’s Law Center (NWLC) found that Michigan is among the worst states in the country in terms of offering tax assistance to low-income families and individuals struggling to afford the high cost of child and dependent care. Michigan joined other midwest states including Indiana, Illinois, and Wisconsin in receiving a failing grade based on the NWLC’s evaluation.
According to new report by the National Women’s Law Center (NWLC), Michigan is one of the worst states in the country in terms of offering tax assistance to those struggling to meet the high costs of child and dependent care. The NWLC’s quadrennial review of state assistance awarded “grades” to states based on an extensive evaluation of the tax policies of the forty-one states that collect income taxes. The review evaluated tax provisions based on the dollar value of each state’s tax provision, whether families that do not owe income tax can get assistance, whether the provision covers costs and provides assistance across income levels, indexing for inflation, coverage of child and adult dependents, whether the provisions encourage higher quality care, and how easy it is to understand the provision and how the provision is promoted. Based on this evaluation, Michigan was one of fourteen states that received a “failing grade” because it assesses personal income tax but offers no employment-related or dependent care tax provisions.
Since 2000, both childcare costs and the number of children in low-income families have increased, but the Congress has frozen federal funding for direct childcare assistance. Consequently, 250,000 fewer children are receiving child care assistance while the Bush administration’s 2007 recommended budget would further reduce expenditures for child care resulting in 400,000 children losing funding over the next five years. Child and dependent care costs vary but range from $3,000 to $13,000 per year, with families with incomes less than $18,000 spending an average of a quarter of their income on child care expenses. Aside from the high cost to families, many states and the federal government have reduced the number of people eligible for assistance and have cut back on reimbursement rates for child care providers, causing many child care providers that serve low-income children to make what the report termed “extraordinary sacrifices,” or as is more often the case, stop serving low-income children entirely. Funds to improve the quality of care by boosting childcare workers education levels and compensation have also been significantly reduced.
While funding on the national and state level threatens children, the NWLC does point to some successes in providing child care assistance through the tax system. There is currently a federal tax credit that provides up to $2,100 in tax assistance, yet its value is limited in that it is not refundable, so families with incomes so low that they do not pay income tax receive no benefits from the credit. As a result, campaigners have focused on improving state tax credits for child and dependent care expenses and counts as a victory improvement in tax provisions in 23 states over the past four years. The NWLC found that thirteen states now offer refundable credits for low-income families with limited state income tax liability. The improved tax policies are credited with helping reduce family tax bills and increasing refunds used to pay for childcare, thus allowing adult family members to remain employed.
Michigan’s failure to provide tax assistance for childcare stands in stark contrast to tax assistance offered by New York and Oregon, two states cited in the report as have the most helpful tax benefits for low-income families. New York offers a fully refundable credit worth up to $2,310 while Oregon’s refundable “Working Families Child Care Credit” does not have a dollar limit but instead operates on percentages. Under Oregon’s assistance plan, a family spending $6,000 on childcare expenses would be eligible for a credit of $2,400.
Borisch Manufacturing, a local electronics company that frequently sells weapons components to the United States military, received tax breaks from the city of Kentwood last week on an expansion. The expansion, which the company says is necessary to make additional room for work done for the military, was given tax abatements on $750,000 in renovations and more than $2.6 million in equipment. In 2004 and 2001, Borisch received tax abatements for similar expansions despite the fact that the expansions come as the company’s sales continue to grow with sales expecting to exceed $50 million in 2007. Kentwood’s Mayor, Richard Root, described the Borisch in the Grand Rapids Press by saying that “This is a remarkably good application for the city.”
As is generally the case with the local media’s coverage of military contractors, there was never any contextual information about what exactly Borisch does for the military and how its contributions are used in the occupation of Iraq. While it has been largely ignored by the corporate media recently, Borisch manufacturers components for a wide variety of weapons systems used in Iraq including the M1A1 tank, fire control computing sights for Paladin canons, targeting components for various guns, and parts for the Stryker military vehicle. Moreover, far from being “abstractions” that have no direct application in Iraq, many of the components manufactured by Borisch provide critical functionality to the military. The Press coverage also neglected to mention that Borisch Manufacturing is just one of many companies in West Michigan producing components for weapons systems used in Iraq.
According to the Grand Rapids Press, Borisch Manufacturing, a local military (“defense”) contractor, is seeking a tax abatement from the Kentwood City Commission for a recent expansion. The expansion, which will cost $3.4 million, will include $750,000 on property improvements and add $2.6 million in new machinery and equipment to the company’s facilities. Borisch has been a steady recipient of military contracts since the start of the “war on terror” and has not only produced components for weapons systems used in Iraq, but markets its work as an inherent part of “patriotism” and ties their work to Christianity with founder John Borisch describing the company as a model Christian business and citing Psalm 115.1 under its company logo.
Borisch is asking for the tax abatements despite previous abatements from the city and increased sales. Sales for 2006 are expected to increase from $35 million in 2005 to $45 million and then grow again in 2007 to $50 million. Kentwood residents are encouraged to attend the public hearing on Borisch’s request for a tax abatement. The hearing will take place at the Kentwood City Commission meeting at 7:30pm on April 4 at Kentwood’s City Hall (4900 Breton Ave SE). Others may contact Kentwood’s City Commission although they will likely not be very receptive to concerns coming from non-residents.
At Saturday’s “State of the City” address, Mayor George Heartwell spoke on the theme of “economic sustainability” yet never really clarified what that term meant in a speech that discussed the need for a property tax increase and ways to support business in the city of Grand Rapids.
On Saturday, January 28, Mayor George Heartwell gave his 3rd State of the City address during a community breakfast at the DeVos Convention Center in downtown Grand Rapids. The focus of the talk was on what the Mayor referred to as “economic sustainability,” even though the term was never really clarified. News coverage of the Mayor’s speech primarily focused on just one of the main proposals, the possibility of raising property tax for residents of Grand Rapids. The Grand Rapids Press ran as it’s headline on the day of the speech, stating simply “Mayor: GR needs tax hike.”
With all the focus on a possible property tax increase, little attention was given to the issues of government efficiency and the increased corporate welfare in the form of tax abatements discussed in the speech. The Mayor said that there was a need to find more efficiency in terms of the City budget and cited the examples of cutting down on paper work and the purchase of 2 electric parking enforcement vehicles, which he claims will save the City $3,000 a year. There was no mention of evaluating the salaries of administrative positions, such as City Manager and his support staff. Heartwell did mention that 63% of the City budget deficit was due to the cuts in state revenue sharing and that Commissioner Roy Schmidt was involved in a regional campaign to reclaim those funds, even though no strategy was presented on how that would be achieved, nor how citizens could get involved. The Mayor also mentioned the need to cut city staff health and pension benefits to be “in line with the private sector.”
Most of the Mayor’s speech was focused on a variety of tactics to support business growth and business development. He proposed a knowledge-based tax abatement as one way to do this, with tax incentives given to industry in the areas of health care, life sciences and environmentally sound business practices. This would lead to a greater possibility of more environmental friendly products being produced in West Michigan, such as alternative fuel cells. Heartwell also mentioned the need to partner with regional municipalities to create what he calls “sustainable business industrial parks.” These environmentally friendly industrial parks would promote buildings that are LEED certified (Leadership in Energy and Environmental Design). Here again, Heartwell provided no concrete examples, just possibilities.
Many of the ideas for this State of the City Speech came from a report put together by the Mayor’s New Economy Task Force. The report from this task force was released in December of 2005, with a number of recommendations that are reflected in Heartwell’s economic proposals. The report is extremely business friendly, which is not surprising when looking at who sits on the task force, as the majority of the members come from area corporations and development firms. Overall, the State of the City address clearly indicated that it is local corporations that matter the most in the economy, with president of the Grand Rapids Chamber of Commerce Jeanne Englehart introducing the Mayor and the event itself being underwritten by AT&T, 5/3 Bank, Alticor, Amway Grand Plaza, Macatawa and Mercantile Bank. In her introductory remarks, the Chamber of Commerce President said that the Mayor was a great advocate for the underserved, yet nowhere in his speech were working people, the poor, or poverty mentioned in Heartwell’s State of the City speech.