LANSING – With Tax Day just behind us, a new national report details how wealthy corporations are shirking their responsibility to support Michigan communities. The report recently released by the Economic Policy Institute and the SEIU shows that 63 percent of all Michigan corporations pay zero in corporate income taxes.
The report, titled Reclaiming Corporate Tax Revenues, includes never-before-seen data revealing how corporations in multiple states managed to entirely avoid paying what they owe in state corporate tax, shifting the obligation to working people to pay for essential services like educating children, maintaining roads and bridges, ensuring public health and safety, and providing clean water.
“We as Americans in this country live by a set of rules of principles, one of those being that we’re all in this together. And the vast majority of us pay our fair share of taxes to help fix our roads, fund our education system, provide mental healthcare and vital programs that we all rely on,” said State Rep. and Democratic Floor Leader YOUSEF RABHI (D-Ann Arbor). “But when the wealthy and big corporations don’t pay their fair share, the impacts are disproportionately felt by working class communities and communities of color.”
In 2012, Republican lawmakers passed Public Act 38, which replaced the previous business tax system with a 6% flat tax rate on corporate income that is used today. To compensate for the loss in revenue, the legislature increased taxes on low- and middle-income families by reducing the state Earned Income Tax Credit from 20% to 6%.
The EPI report makes clear that corporations nationwide have spent decades pushing policies that enrich themselves by refusing to pay what they owe in taxes. As a result, the effective corporate tax rate in states has fallen by nearly 50% since 1989, causing a nationwide revenue shortfall in states of between $40 billion and $57 billion.
“Because of politicians allowing wealthy special interests to rig the tax system, the people who clean office buildings, maintain our roads and care for our elderly and children pay their taxes every year while billionaires and their corporations are getting a free ride,” said JENNIFER ROOT, Executive Director of SEIU Michigan. “Working people, who have spent the past two years making unimaginable sacrifices to keep our communities going, are fed up and demanding that corporations stop putting their profits before our communities and start paying their fair share.”
In Michigan, the State Treasury collected about $541 million in business taxes in fiscal year 2020, almost a billion dollars less than the $1.4 billion collected in 2011. Personal income tax revenue increased from $6.4 billion to $10.5 billion over the same span.
“Caregivers and families across every zip code and every background are hurt when corporations use loopholes to avoid their obligations while hiking prices on consumers,” said EBONI TAYLOR, MI Executive Director of Mothering Justice. “We all deserve a system that provides better wages, time to care for loved ones, and healthier neighborhoods. Making wealthy corporations pay what they owe is a good place to start.”
SEIU and Mothering Justice are members of Fund MI Future, a joint effort of nonpartisan community organizations, unions of working people, and policy experts to create shared prosperity for all Michiganders by fully and fairly funding our public services like schools, roads, and clean water.
