Should Construction Workers Pay Taxes to Billionaires?

If you were wondering whether your government works for you or for politically connected special interests, your elected officials are about to give you a simple answer. That’s because if some politicians and bureaucrats in Lansing have their way, your next income tax check might go to a billionaire real estate developer rather than schools, roads or other public services.

A package of bills already passed by the Michigan Senate and currently under consideration in the House takes our existing “economic development” system of credits and subsidies and rigs it even more in the favor of special interests at the cost of working people.

Under the legislation, employers will withhold income taxes from the paychecks of carpenters, plumbers, electricians and others in the skilled trades whose skills and sweat will build selected “transformational brownfield projects.” But that tax money, instead of being sent to the state treasury, will be kept by the politically connected developers behind the project. The men and women who work on these sites will look down at the “State Income Tax withheld” field on each pay stub and know that all that money is going right back to the developer whose name is on the fence.

Then, once the building is complete, a portion of the income taxes due from everyone living or working in the building will also end up in the developer’s pockets. That’s in addition to the property and sales taxes that they will already be able to “capture” under the existing system. In a quiet change to long-standing precedent, this would be the first time that personal income taxes in Michigan would be redirected to somebody other than the government.

This, of course, makes no sense other than to developers who love the idea of taking other people’s money to support their projects, bureaucrats who make a living managing these programs and the politicians who get campaign donations, press releases and ceremonies with silver shovels and big scissors for cutting ribbons for the cameras.

These bills, by the way, are being considered by the same legislators who recently told small-business entrepreneurs and working people that the state couldn’t afford to roll back the “temporary” income tax increase from 2007. The tax-cut proposal, which lawmakers in the House voted down, would have let people keep 0.35 percent more of their own earnings. Which elected officials will vote against giving a Macomb County construction worker a $215-a-year tax cut, as was promised more than a decade ago, only to then send that person’s entire income tax payment to a wealthy developer? Voters can – and should – take notes.

This kind of “tax increment financing” is based on the already-debunked concept that if it weren’t for developers, there wouldn’t be tax money coming in anyway so we might as well let them keep those dollars for their trouble. But according to the federal Bureau of Labor Statistics, construction employment in Macomb County is back to the pre-recession levels of 2007. So the idea that construction workers won’t be able to get a job unless the state offers these schemes simply won’t fly. It’s even less likely that people living or working in a favored development project would make more money and pay more in taxes than they would have across the street or across town.

Working Americans and entrepreneurs who risk their own resources to start small businesses that create good jobs in our communities already don’t benefit enough from the taxes they pay. They wonder, understandably, if their government is working for them or for the special interests. The way our elected officials treat this corporate welfare legislation so soon after they failed to roll back the personal income tax will tell all of us a great deal about how that relationship stands in Michigan.