It was the Tea Party that derailed discussions over the U.S. debt ceiling in 2011, and it was Occupy Wall Street that disrupted a few trades on the New York Stock Exchange before it dissipated.
By comparison, 2012 may be the acme of idiot populism. Ballots this election cycle will be littered with anti-tax measures and other anti-stuff initiatives and referendums.
A proposed change to the Michigan Constitution, which would require a two-thirds majority in the state legislature, to raise taxes, will be set before voters Nov. 6. A recent survey conducted by The Detroit News showed that a little more than half of the public supported this proposal.
“While it may sound good, it’s not good policy,” Michigan Gov. Rick Snyder said. In his disapproval of the proposal, Snyder also defined the idea of idiot populism as ideas that sound good but aren’t good policy.
Our state levies an income tax of 4.35 percent, a corporate tax of 6 percent, a sales tax of 6 percent and collects approximately $1,234 per capita in property taxes. Compared to the other 50 states, Michigan isn’t in the top 10 for highest income taxes, corporate taxes, sales taxes or property taxes.
His first year in office, Snyder, a Republican, made it a priority to replace the Michigan Business Tax with a corporate income tax, which effectively cut taxes for businesses. In June, he signed into law a hastened cut to state income taxes, down to 4.25 percent from 4.35 percent, which will take effect Oct. 1.
The Tax Foundation, which seeks to “Educate taxpayers about sound tax policy and the size of the tax burden borne by Americans at all levels of government,” releases its State Business Tax Climate Index every year: Michigan ranked 18th out of the 50 states this year.
So what is the reason behind the proposal?
It can hardly be said that the state is an overtaxed netherworld. There also hasn’t been any indication that taxes will rise in the near future. So, why vote for this proposal?
The Center on Budget and Policy Priorities released a report Feb. 13 that details, “Why supermajority requirements to raise taxes are a bad idea.” The first reason is that supermajority rules make it difficult to enact tax reform to rid the tax code of useless tax breaks and loopholes for special interest groups.
“If this proposal would have been in place, we would still have the Michigan Business Tax today,” Snyder said of the proposal in an interview with The Detroit News.
Second, lawmakers will simply raise fees, tuition and other excises that are not subject to the supermajority rule. Investors are also less likely to lend to states that have less flexibility to conduct fiscal policy.
Infrastructure projects, which the state desperately needs, would be harder to finance with temporary tax increases.
Overall, a supermajority allows for a small minority of legislators to prevent the legislature from doing what is often unpopular but sometimes necessary: raising taxes.
Government is not only a maker of rules and confiscator of wealth, it is civil society’s machine. And this machine needs to be well oiled and have the parts to function properly. The machine has already been tweaked by the ideas of idiot populism when it adopted secondary term-limits for legislators in 1992 (we already had term-limits called elections) that has left us with a hyper-partisan and dysfunctional state legislature.
If you want lower taxes that is all fine and well, but why throw another wrench into the machinery?