LANSING – It is the type of technical question that can occasionally throw people into fits, but the issue has been raised about whether Gov. Rick Snyder’s proposal to combine his proposed changes to the state’s personal income tax and create a new corporate income tax in one bill would run afoul of the Constitution’s provision that no bill encompass more than one object.
The issue is extended further with the idea of combining the budgets for 2011-12 and beyond into one omnibus bill.
The administration says no, the issues do not violate the constitutional provision, and is has a powerful precedent at hand: the 1967 bill that created both a personal and corporate income tax.
But at least one major Democrat has challenged that notion. Former Lt. Governor John Cherry this week argued, briefly and online, that the Constitution prohibits separate issues being rolled into one question.
“We don’t roll logs like the U.S. Congress,” Cherry said on Facebook.
The issue also remains something of a novelty question at this point.
Rep. Jud Gilbert (R-Algonac), chair of the House Tax Policy Committee, said, when asked by a reporter on the question, that he had not heard the issue raised before.
“If there was a potential problem, we would kind of need to deal with it,” he said, saying the issue probably needs further study.
Sen. Steve Bieda (D-Warren), the Democratic leader on the Senate Finance Committee, said he had seen the same post by Cherry and had asked his caucus’ legal counsel to research the issue.
Though he was not aware of the legislative history, Bieda said he wanted to make sure the bill when it came through the Senate embraced just one object.
And John Sellek, spokesperson for Attorney General Bill Schuette, said no opinions on the question had been requested. Nor could anyone in the Department of Attorney General recall the issue ever being raised in reference to the tax law previously.
Sara Wurfel, Snyder’s press secretary, said no legal concerns about the issue had been raised.
The idea behind putting all the provisions of Snyder’s tax proposal into one bill was not to make it more politically likely both provisions would pass, but to deal with the issue of changing Michigan’s tax system “in a holistic approach,” Wurfel said. “We’re trying to stop tackling each issue one by one. We’re looking at it in a really comprehensive fashion.”
The Constitution, in Article IV, Section 24, states, “No law shall embrace more than one object, which shall be expressed in its title.” That provision was first included in the 1908 Constitution and carried over into the current document.
When Snyder’s administration announced on February 17, as part of the overall budget and tax proposal, that he wanted his proposals included in one bill, it raised surprise with some persons. Asked about the issue at a press conference following the presentation about the question, Snyder and Lt. Governor Brian Calley said the issue should not pose a problem.
Snyder’s proposal calls for ending the Michigan Business Tax, and replacing it with a corporate income tax of 6 percent on “C” corporations. He also calls for taxing pensions earned from public sector jobs and increasing the tax on private sector pensions, ending the Earned Income Tax Credit, and ending application of the personal exemption on higher-income individuals among other changes to the personal income tax.
Dennis Cawthorne, now one of the state’s top lobbyists with Kelley Cawthorne and the former House Republican leader, was in the House in 1967 when the income tax was created. He recalled that the bill establishing the tax – though at the time the popular focus was mainly on the effects an income tax would have on individuals – included both a corporate and personal income tax.
And Cawthorne is correct. SB 89 , in 1967, which became PA 281 of 1967, created a tax on income of both individuals and corporations. The personal income tax rate was 2.6 percent (it is now 4.35 percent and scheduled this year to fall to 4.25 percent). The corporate income tax was set at 5.6 percent (7 percent for financial institutions).
But fewer than 10 years later, the corporate income tax was repealed, along with a number of other business taxes including an inventory tax, in favor of the Single Business Tax. That tax was repealed and then replaced in 2007 with the MBT.
One issue in the overall question of whether two proposals in one bill violates the title-object clause is whether the fact that for 36 years the income tax has now dealt solely with personal income means trying to add a new corporate income tax adds a second object to the law.
The noun “object,” as defined by Black’s Law Dictionary, is the “end aimed at, the thing sought to be accomplished; the aim or purpose, the thing sought to be attained.” Among the standard dictionary definitions of the noun is “any thing that can be apprehended intellectually.” Using those definitions, could one argue that a corporate income tax and a personal income tax are in fact two different objects?
Cherry’s post was in response to an editorial in The Detroit News that sharply chided Republican senators for not supporting Snyder’s tax proposal, especially the provision on taxing pensions.
Written apparently in haste, Cherry actually referred to the budget instead of the tax proposal, but he wrote, “What nobody is telling you is that the Michigan Constitution does not allow the budget proposal to be voted on in one vote. In our constitution we prohibit different issues from being rolled into one. We don’t roll logs like the U.S. Congress.”
Cherry could not be reached for comment on this story.
Cherry has been quite active and quite critical of the Snyder budget proposal in the social media however, especially of the provisions to raise taxes on some individuals while cutting them on companies.
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