TOWN HALL FORUM

Topic:

Michigan Tax Structure & Jobs Creation

www.abe4michigan.org

Abe’s Story

• Born in Aleppo, Syria to a Catholic family, it was difficult growing up as a practicing Christian in a Muslim country.

• In 1966, immigrated to the U.S. to an upstate New York town not knowing the language or the customs of the new world.

Abe’s Story

• As a result, Abe had to work hard with no money to pay for school, education, or other survival needs.

• In 1970, Abe graduated from LSU with a Bachelor of Science in Civil Engineering degree.

• After graduation, he went to work as a design engineer in Baton Rouge, LA.

Abe’s Story

• Shortly thereafter he married Darlene Kali, a native of Detroit, Michigan, and they settled in Southeast Michigan.

• Married for 39 years, they have 2 adult daughters and 2 granddaughters.

Experience to Turn Michigan Around

• In 1972, Abe was employed by Ayres, Lewis, Norris & May, Inc. (ALNM) in Ann Arbor, MI. He climbed the ladder, and in 1985 became the President of the firm.

• Abe was the rainmaker and jobs creator, and under his leadership, ALNM expanded and grew from 31 employees to 152 employees when he retired in 2004.

Experience to Turn Michigan Around

• During his time at ALNM, Abe created 121 jobs in Michigan. There were high-paying engineering and technical jobs.

• His accomplishments have been recognized by:

– National Council of Examiners for Engineering & Surveying– Michigan Water Environment Association– State of Michigan Board of Registration for Professional Engineers– National & Michigan Chapters of the American Council of Engineering

Companies (ACEC)– Congressional Recognition from U.S. Congressman Thaddeus McCotter

A Self Made Man

• Abe did not inherit anything. He pulled himself up by the straps of his boots and achieved the American Dream.

• He grew a family, created jobs, and is a true Christian and Catholic in his upbringing.

Abe’s Foundation Plan

Engineering a Plan to Create Michigan Jobs

Abe’s Foundation Plan

10. Lansing is the People’s CapitolTougher lobbying rules and control of special interest!

9. Michigan is a Destination StatePromote our natural resources!

8. We can Have Better Health CareAllow for more competition.

Abe’s Foundation Plan

7. Transportation Policy that Work for UsOur roads should come first!

6. You Should Always Feel SafeWork with local governments to improve our police and fire protection.

5. Energy Policy for Today and Tomorrow’s Needs

Allow for Michigan to pioneer alternative and traditional energy opportunities.

Abe’s Foundation Plan

4. Improving Public EducationDemand accountability and allow for competition for everyone.

3. Get our Money’s WorthWe need a more transparent Lansing.

2. Reducing Taxes for ALL Michigan Taxpayers

Reduce regulation and evaluate current tax policy across the board.

Abe’s Foundation Plan

1. Jobs are Job ONE!Improve business climate by ending unnecessary regulation.

Engineering a Plan to Create

Michigan Jobs to put

Michigan Back on TOP!

Why Jobs are Job ONE!

• Michigan has the highest unemployment rate in the country, at 14.6%

• Wayne County unemployment rate is 16.1%

• Michigan’s unemployment rate is higher than it has been since the 1980s!

U.S. vs. Michigan Unemployment Rate

A Right to Work State

A Right to Work State?

• The basic concept of a right-to-work law is simple:– Workers should not be obligated to join or

give support to a union as a condition of employment.

A Right to Work State?

• Economies of right-to-work states between 2001 to 2006 grew by an average of 3.4% compared to 2.6% for non-right-to-work states and 0.7% for Michigan

• Jobs grew by 1.2 percent annually in right-to-work states, compared to 0.6% for non-right-to-work states, while jobs decreased by an average of 0.8% in Michigan.

A Right to Work State?

• The gap in per-capita disposable income continues to shrink, to the point where most right-to-work states are likely to have higher incomes than Michigan does within a few years.

A Right to Work State?

• Trends between 2001 and 2006 were more favorable towards right-to-work states than they had been in previous years.

• In light of Michigan’s current economic difficulties, the leads to the conclusion that the case for making Michigan a right-to-work state has only become stronger!

Prevailing Wage Law

Prevailing Wage Law

• Michigan’s prevailing wage law requires:– Contractors on state-supported construction

projects pay union wages.

Prevailing Wage Law

• This law was passed when union workers constituted a majority of Michigan’s construction work force – they represented just 22.1% in 2006.

• The “prevailing wage” now forces contractors to pay wages that average 40%-60% higher than those found in the marketplace.

Prevailing Wage Law

• This law increases the cost of construction by 10%-15% and the additional costs are passed along to Michigan Taxpayers.

Prevailing Wage Law

• In 18 States without prevailing wage laws in 2004, construction workers made up 5.3% of the work force, compared to 4.2% for states with strong prevailing wage laws. In Michigan it was only 3.7%.

Prevailing Wage Law

• Study’s show the temporary suspension of Michigan’s prevailing wage law in the mid 1990s was responsible for the creation of an additional 11,000 construction jobs between 1994-1999

Prevailing Wage Law

• Given the evidence on the effect of prevailing wage laws, the state’s economic difficulties and the changes that have taken place in the labor market, Michigan’s prevailing wage law should be REPEALED or at the vary least overhauled to reflect the current state of the construction industry and eliminate unnecessary costs to Michigan Taxpayers.

Repealing the prevailing wage law

• Repealing the state prevailing wage law would have saved taxpayers an estimated $250 million in 2007.

• Repealing the local prevailing wage law could have saved another $19 million.

• Exempting just the public school districts from the law would have saved $126 million in 2007.

The Michigan Business Tax

Michigan Business Tax

• Michigan residents and job providers were given another reason to consider moving:– A new complicated business tax (Michigan

Business Tax) to replace the old complicated Single Business Tax (SBT).

– A Service tax that was passed and repealed.– A $1.4 billion net tax hike (a surcharge

added to the MBT – roughly $614 million)

Michigan Business Tax

• Slashes Auto Industry taxes from $57.4 million to $1.4 million, which is offset by taxes on many non-manufacturing small sized businesses.

Michigan Business Tax

• The MBT was enacted to replace the Single Business Tax (SBT), but could we have replaced the SBT with nothing and not devastate the budget with a loss of $1.885 billion?

The answer is: YES

The Bloated Public Sector

The Bloated Public Sector

• According to data from the Bureau of Labor Statistics and Michigan Civil Service Commission, Michigan’s state and local government full-time employees are getting $5.7 BILLION more in benefits than if they were in a similar position in the private sector.

The Bloated Public Sector

• Michigan’s private sector decreased 12.1% of its jobs since 2000 (484,200 jobs), while Michigan’s public sector has dropped only 6.1% and the State government and state enterprises like universities actually expanded their workforce.

The Bloated Public Sector

• Since 2001, the State of Michigan has disproportionately increased its average annual pay rate by 26% for state government workers and by 20% for local government workers, compared to 15% for Michigan’s private sector.

The Bloated Public Sector

• However, wages are not the greatest inequity, the benefits paid on top of elevated salaries is.

• Michigan’s Civil Service workforce received benefits worth an additional 37.95% of salary in 2000. That figure had grown to 58.15% by 2008, while the Private sector are worth 43.62%.

The Bloated Public Sector

• While Michigan’s public employees typically receive higher retirement benefits, much of the extra cost of their benefits comes from public-sector health insurance policies generally having lower deductibles and co-pays than private sector plans.

The Bloated Public Sector

• Government employees in Michigan receive benefits worth almost $6 billion more than those of private-sector employees. Such a disparity must be addressed if Michigan is to improve its economic future.

• The people of Michigan have a government that is supposed to serve them, not the other way around.

Summary

• Make Michigan a Right-To-Work State

• Eliminate the prevailing wage law

• Repeal the Michigan Business Tax

• Fix the bloating in the Public Sector

All Data & Information obtained from the Mackinac Center, MI DELEG,

Bureau of Labor Statistics, and the Michigan Civil Service Commission.

Abe for Michigan

• It is time, Lasing starts representing the views and wishes of the people!

• Please visit our website to join the team, Engineering a Plan to Create Michigan Jobs or to download a copy of this presentation– www.abe4michigan.org

Questions?

Thank You for Attending!

www.abe4michigan.org