IndustryWeek submitted questions to candidates from three key political races to better understand how the upcoming election could shape the future of U.S. manufacturing. You can also read responses from Senator Mike DeWine (R-Ohio) and Senator Rick Santorum (R-Pa.).
Editor's Note: Michigan's Single Business Tax was enacted in 1975 to replace the state's corporate income tax and six other business taxes. It is a value-added tax on business income, compensation to employees, rent payments and other in-state business activity. It also grants credits to businesses that invest within the state. The tax has been criticized by some, including GOP gubernatorial candidate Dick DeVos, for hurting Michigan businesses and discouraging new business development in the state. The GOP-led state legislature voted on Aug. 9 to repeal the tax by 2007. The debate is now focused on how the state should replace lost income from the eliminated tax.
Dick DeVos: GOP Candidate For Michigan Governor
IW: What are the most important public-policy issues that must be addressed to ensure a strong economic future for manufacturing in your state?
DeVos: It's all about jobs. Jobs are the No. 1 issue in Michigan right now. Our state does not have a climate for job creation. Job-killing taxes like the SBT (Single Business Tax) punish job makers for creating jobs, providing their employees with benefits, and investing in new technology. Taxes like the SBT and Michigan's personal property tax hurt manufacturers more than any other tax. They've got to go if we want to help manufacturing and bring jobs back to Michigan.
IW: What are the most critical issues facing the auto industry in Michigan and how do you plan to address them?
DeVos: The auto industry is going through a tough restructuring. Michigan has a proud automobile heritage and we need to be doing everything we can to help our automakers succeed in the 21st century. They've retooled, reengineered and are beginning to produce an impressive product. I was at the auto show in Detroit in January. I've seen their great work. Now we need to sit down with our national leaders and work on trade issues to make sure that Detroit's automakers can compete fairly both here in the United States and around the world.
IW: You've said that Michigan's Single Business Tax impedes business growth in your state. What are your plans for this tax and how do you think your plan will impact manufacturing growth in Michigan?
DeVos: It has to go. My plan is to eliminate the job-killing SBT. This will significantly help manufacturers in Michigan. No longer will they be punished for creating jobs. No longer will they be punished for providing benefits or investing in new equipment. This is one of the single biggest steps we can take to help manufacturers grow in Michigan.
IW: How do you plan to address business leaders concerns about the cost and scope of health-care coverage in your state?
DeVos: The cost of health-care coverage is a serious concern for business leaders. One thing I've suggested is allowing for increased pooling of health care coverage to lower costs for our small businesses who often have difficult times providing coverage to their workers. Also, we must work to reduce fraud and increase efficiency in Medicare, which has costs that are borne by all of us.
IW: According to the Associated Press, Michigan's utility costs are higher than surrounding states and slightly above the national average for industrial customers. How do you plan to ease the burden of rising energy costs for manufacturers in your state?
DeVos: High energy costs in Michigan are another of the many factors that add up to a bad jobs climate in our state. Our state's energy costs make us uncompetitive. Our state has been increasing regulations and halting all new power plant construction, leading to higher energy costs for Michigan job makers. We need to cut excessive regulations and push for more plants to provide power in our state. This will lower energy costs and create jobs for people in Michigan.
Incumbent Democrat Gov. Jennifer Granholm
IW: What are the most important public-policy issues that must be addressed to ensure a strong economic future for manufacturing in your state?
Granholm: Michigan was built on the hard work of our manufacturing sector, and I am committed to ensuring our manufacturers have the opportunity to thrive here. In order to secure their future success here in Michigan, we must ensure that our business climate remains competitive. That's why I signed 59 targeted tax cuts for businesses, including a $600 million cut for our manufacturers that encourages the insourcing of jobs. Today, Michigan's business tax burden is below the national average, and only 12 states have lower state and local business taxes, according to the Council on State Taxation.
We must also train our workers for the jobs of the 21st century. In the past, students could walk off of their high school graduation procession and onto a factory line, but that is no longer the case. In the 21st century, advanced manufacturing jobs will require every worker to have a college degree. My New Merit Award scholarship will give all families $4,000 to send their child to college or technical training. And I've put in place a rigorous high school curriculum to ensure our students are well prepared for college and the workforce.
IW: What are the most critical issues facing the auto industry in Michigan and how do you plan to address them?
Granholm: In order to encourage "insourcing" of jobs, I signed a $600 million tax break for our manufacturers. I will continue to demand that the president meet with the Big Three and join with our automotive leaders to implement immediate on-the-ground solutions to festering federal problems like unfair trade and health-care reform that tilt the global playing field in favor of other countries. And I will continue to make affordable health care universally accessible to all of Michigan's people, while maintaining a tax structure for our businesses that is competitive and fair, but doesn't shift the burden to everyday citizens.
Michigan is the poster child for the impact of unfair trade policies. As the automotive capital of the world, Michigan has been hurt more than any other state by President Bush's refusal to hold other countries accountable to our free-trade agreements. Our autoworkers are the best in the world and can compete with anyone-if they have a level playing field. But by refusing to enforce trade agreements, President Bush is asking our workers to compete with one hand tied behind their backs. While the Chinese are stealing our patents and unfairly manipulating their currency, and the South Koreans are putting up barriers to keep our products out of their markets, Michigan jobs are being shipped overseas.
IW: Your opponent says Michigan's Single Business Tax impedes business growth in your state. What are your plans for this tax and how do you think your plan will impact manufacturing growth in Michigan?
Granholm: Today our business taxes are the 13th lowest in the nation. I have supported repealing the Single Business Tax. In fact, I am the only one who has put a plan on the table that would replace the SBT as we know with a simpler tax that would have a lower rate and be less sensitive to payroll. My plan would have spurred job creation in Michigan while protecting critical services that are valued by both the general public and the business community. Instead lawmakers chose to eliminate the tax without a way to make up for the $1.9 billion revenue it created, putting those vital services at risk. I will continue to fight to keep business taxes competitive in Michigan to ensure the success of our manufactures.
IW: How do you plan to address business leaders concerns about the cost and scope of health-care coverage in your state?
Granholm: We need national solutions to combat skyrocketing health-care costs, but so far the Bush administration has offered no help. As governor, I know affordable health care is critical to our competitive business climate, which is why I have been fighting to make access to affordable health-care coverage universal for all of Michigan's people. My Michigan First Health Care Plan will make affordable private health plans available to small business employees, the self-employed and the working poor who are presently without access to traditional employer-based health insurance or government-run programs. My plan will not only expand access, but it will help reduce the cost we all pay. Currently, health-care providers and insurance companies subsidize the cost of health care for the uninsured to the tune of $750 per year per family. By making access to health coverage universal, we are expanding access for those without coverage while bringing down the cost of care for everyone and making our businesses more competitive.
IW: According to the Associated Press, Michigan's utility costs are higher than surrounding states and slightly above the national average for industrial customers. How do you plan to ease the burden of rising energy costs for manufacturers in your state?
Granholm: Actually, Michigan's industrial and commercial electric rates are both far below the average of the nation's biggest 10 states, and Michigan, unlike other states, has not artificially reduced our energy rates. Price manipulations during utility deregulation have artificially allowed other states to have low energy rates. Many states will soon be uncapping these below-market rates, and as a result have and will see significant increases in the price of energy. Furthermore, Michigan has the lowest natural gas rates of any state east of the Mississippi River.
While our rates our reasonable, I know more can be done. That's why I have called on Peter Lark, chair of the Public Service Commission to put together a 21st century energy plan for Michigan to help ensure that we can meet our future energy needs in a way that is reliable, safe, clean and affordable for the state.
My opponent's plan to "lower rates" calls for a major investment in transmission lines, which will be passed along to ratepayers. His plan to reduce rates will result in higher rates-rates that are outside the control of state regulators.
