LANSING ? Robert Kleine, a former Michigan Department of Treasury official and co-author of the Single Business Tax, said in order for Michigan’s current business tax system to function, lawmakers must go back to the original wording of the SBT.
Kleine made those remarks during a taping of Michigan Public Television’s “Off the Record” show this week. Kleine also speculated the state’s economy will not fully bounce back until 2008.
In terms of bringing any relief to struggling manufacturers, Kleine said the proposal floating around the Republican-controlled Legislature would not make much of dent in aid to General Motors, Delphi and the likes. Although he did say that Governor Jennifer Granholm’s proposal is the “best one I’ve seen,” Kleine said the business tax system must be made simpler in general.
“There have been so many changes (since I co-wrote the tax),” he said.
He also said that the governor’s call for increased tax on insurance premiums might be going a little too far.
Kleine, who now is a private consultant, previously served in the state’s Office of Revenue and Tax Analysis in the Department of Treasury. He was one of a small group of officials who in 1975 helped draft the SBT that replaced seven other business taxes and became the first – and so far only – value-added tax in the United States.
Michigan’s economy is no different than other Midwest states that have a large auto-manufacturing sector, he said. Kleine also added that the governor should not be blamed for the economic downturn, but she and the Legislature need to look like they are doing something to save jobs.
“We can’t overcome all these international and national factors” that affect the economy, he said.
Kleine said it was not a good idea to get rid of the SBT altogether because whatever would replace it would create another bracket of industry winners and losers.
“I’m not sure if you can come up with anything better,” he said, adding that going to a corporate tax is no help because of its instability and subsequent impact to the state’s budget. “The best tax is one that has a broad base and a low rate.”
Kleine also came out against a so-called fair tax, which would take out the SBT and replace it with a higher sales tax.
In terms of speculating when the economy will bounce back, Kleine said it would most likely be 2008, with the manufacturing sector leveling off and other industries readjusting its employment.
Speculating on the future of GM, Kleine said it’s possible the company could go bankrupt and be bought out by Toyota. He pointed out that Ms. Granholm has visited Toyota officials in Japan to spur investment in the state.
This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com
