Michigan’s Prop 5 is WORSE than ALEC’s Model Legislation on Taxation

Michigan’s Proposal 5 is actually worse than the ALEC model legislation that calls for a super majority to levy new taxes.

The ballot measure was backed and financed by Michigan Alliance for Prosperity, who in-turn was bank-rolled by the Liberty Bell Agency to the tune of $2,288,921 as of the July reporting cut-off. Liberty Bell is owned by Matty Moroun, billionaire owner of the Ambassador Bridge (Detroit to Windsor), who has a personal interest in ensuring the state legislature’s ability to levy new taxes is severely hobbled. Moroun wants to maintain his monopoly on that critical commerce route and has pulled-out all the stops to prevent Michigan and Ontario from building a publicly-owned bridge to replace the aging Ambassador Bridge. 

The broader ramifications of requiring a two-thirds majority will likely cripple the ability of the state to keep its financial house in order. The legislature will maintain the power to create tax loopholes (and they will), but will not be able to close them without super majority support. As if that wasn’t bad enough, Prop 5 doesn’t allow for emergency taxation measures to preserve fiscal solvency. ALEC’s model legislation at least has a built-in emergency relief valve that allows for an exemption in the case of handling interest payments on state debt.

Prop 5’s non-compromising, fiscally irresponsbile appraoch will possibly expose Michigan to a lower bond rating and therefore higher interest on its debt, thus creating a spiraling causal feedback loop that Michigan simply cannot afford.

Here’s the language of Prop 5:

PROPOSAL 12-5
A PROPOSAL TO AMEND THE STATE CONSTITUTION TO LIMIT THE ENACTMENT OF NEW TAXES BY STATE GOVERNMENT

This proposal would: Require a 2/3 majority vote of the State House and the State Senate, or a statewide vote of the people at a November election, in order for the State of Michigan to impose new or additional taxes on taxpayers or expand the base of taxation or increasing the rate of taxation.
This section shall in no way be construed to limit or modify tax limitations otherwise created in this Constitution.

Should this proposal be approved?
YES __
NO ____

Here’s a summary of the ALEC proposal:

Super-majority requirements are based on the premise that tax increases fuel excessive government spending. Therefore, to more effectively control the budgetary process, the ability to raise taxes should be made as politically difficult as possible, require broad consensus, and be held to a high standard of accountability. This Act calls for a constitutional provision requiring all tax and license fee impositions and increases to be approved by two-thirds of all members of each House. It provides for an exemption if there are insufficient revenues to pay interest on the state’s debt.

Wow, worse than ALEC? Now that’s really bad!

Amy Kerr Hardin

(This article also appears in Voter’s Legislative Transparency Project )

 

 

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One Response to Michigan’s Prop 5 is WORSE than ALEC’s Model Legislation on Taxation

  1. Hector Solon says:

    Great piece.

    FACT: Michigan is now the LABORATORY of CHOICE for ALEC experiments and new models. We are being had in this State. Thanks for posting this, it’s important. You have been doing some real solid pieces up there, keep ’em coming.

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