DeVos' tax proposal slammed
Thursday, October 12, 2006
By: Chris Christoff

Gubernatorial challenger Dick DeVos's plan to slash taxes has been called irresponsible, and would be detrimental especially in communities where the taxes he proposes to eliminate make up the majority of their income...

Republican gubernatorial candidate Dick DeVos' assertion that he'd eliminate personal property taxes on businesses dropped a $1.7-billion bomb on the fractious election-year issue of taxes and state spending.

DeVos' remarks during Tuesday's debate with Gov. Jennifer Granholm furthered his support for a drastic overhaul of business taxes, compared to Granholm's more measured approach.

He also piqued concern among schools and local governments, which rely on personal property taxes.

Personal property taxes will generate $760 million for schools statewide and $916 million for local cities and townships this fiscal year. The taxes are based on business assets and equipment, including heavy industrial machinery, and are collected by local governments.

"Michigan cities are operating with a fiscal noose around our neck. Eliminating the personal property tax would be like kicking the chair out," said Summer Minnick, lobbyist for the Michigan Municipal League.

DeVos' spokesman John Truscott said DeVos would replace "a great deal or most" of the $1.7 billion in revenue that would be wiped out with the personal property tax. DeVos has previously backed reducing the tax.

"The reality of Michigan has changed. The crisis has deepened," Truscott said. "If we're going to completely rewrite our business tax system, the personal property tax should be included."

DeVos would replace part of the lost revenue with a different type of business tax, Truscott said.

For communities that are industry-based, the tax is huge.

City of Wayne finance director Tim McCurley said his city's personal property tax brings in $14 million -- 42% of the city's general budget -- and $7 million for Wayne-Westland Community Schools.

The percentage is unusually high in Wayne because the small city has two large Ford Motor Co. plants with a large amount of taxable machinery.

"Even if you replaced 90% of it, you're still talking about cutting $400,000," McCurley said. "For us to cut that much, you're talking police, fire, public safety."

Cities and townships have already seen their state aid whittled away in recent years.

Granholm and the Legislature agreed last December to cut personal property taxes for companies that expand or move their operations to Michigan from other states. The cut is expected to save businesses $600 million for the next five years.

DeVos and Granholm also differ over elimination of the Single Business Tax (SBT), which generates nearly $2 billion for the state.

DeVos recently said he favors replacing at least half of the $2 billion in lost revenue with a fairer business tax. Granholm says all the revenue should be replaced.

Chris DeWitt, Granholm's campaign spokesman, called DeVos' plan to eliminate personal property taxes irresponsible.

He said DeVos, former Amway president and heir to the family-owned company (now Alticor), would benefit personally from such a large business tax cut.

"He claims to be a successful businessman, yet he comes up with an idea of cutting all these taxes and has no clue whatsoever as to what the real impact would be," DeWitt said.

DeVos backed a petition drive earlier this year by Oakland County Executive L. Brooks Patterson to eliminate the SBT by the end of 2007, instead of 2010, when it was scheduled to expire.

Patterson said Wednesday he supports DeVos' effort to cut taxes, but said the personal property tax could not be eliminated.

"There are some communities where it makes up 40% to 50% of their budget," he said.

Both candidates face accusations

Michigan Democrats Wednesday accused DeVos of lying when he claimed that no products made by Amway/Alticor in China are shipped back to the United States.

At a Lansing news conference, party Chairman Mark Brewer displayed a package of tissues with the Amway logo and an inscription that indicated they were made in China.

Rob Zeiger, a spokesman for Amway's parent company Alticor, called the allegation laughable. The tissues appear to have been manufactured between 1989 and 1992, Zeiger said, before Amway/Alticor had a facility in China.

He said no Amway brand products have been sold in the United States since 2001, and that none of the company's products manufactured in China are sold in the United States.

Also Wednesday, Republican Party Chairman Saul Anuzis said Granholm, former legal counsel to Wayne County government, played a key role in the shoddy response to allegations of abuse at the county's juvenile detention facilities in the early 1990s.

Anuzis said Granholm assured action would be taken during a federal investigation of the detention center in 1994. But the problems continued, while Granholm moved on to state government, he said.

DeWitt said the charge is a "new low" for state Republicans and that the county took action to correct long-standing problems at the facilities.