Michigan tax facts, part 5: Who gets tax breaks in Michigan?

Editor’s Note: To help voters make sense of ubiquitous political arguments in this fall’s elections in Michigan, Bridge’s 10-part special report explains Michigan taxing and spending issues. Today we present parts five and six. Read each five-minute primer published so far:
Part 1: Are Michigan taxes too high, too low or just right?
Part 2: Who wants what in the long war over Michigan taxes?
Part 3: Who pays the taxes in Michigan?
Part 4: What do you taxes pay for in Michigan?

Just about everybody in Michigan gets a tax break. Really. It might seem hard to believe, but it’s true.

Republicans and Democrats alike routinely write special tax breaks into state law. In effect, politicians in Lansing regularly operate on two old political slogans: “Don’t tax you, don’t tax me, tax that guy behind the tree.” And “It’s a lot easier to give a tax break than to take a tax break away.”

In accountants’ language, such tax breaks are called “tax expenditures” and are defined as “tax revenue foregone as a result of preferential provisions such as credits, deductions, exemptions deferrals, exclusions, or lower tax rates” than state law would otherwise require.

Farmers are among the recipients of hundreds of specific tax breaks in Michigan – but then again, so is almost everyone else. (Photo by Flickr user Jason Mrachina; used under Creative Commons license)

In other words, as one state budget document recently acknowledged, they are “open-ended entitlements.” Such state tax breaks in Michigan total more than $30 billion a year. There are so many Michigan tax breaks that it recently took an 87-page state government report to document them all.

In short, Michigan’s tax code currently includes:

• Nearly $2.5 billion in business tax breaks. Much of these are in the form of tax breaks to attract development. Moviemakers get breaks for filming Michigan. And small beer brewers get a credit for, well, not being Budweiser?
• $15 billion in sales/consumption tax breaks. You don’t pay sales tax on food at the grocery store, for example. Churches get tax breaks on the cars they buy and the sanctuaries they build. Nonprofit organizations (including the Center for Michigan and Bridge Magazine) get tax breaks on purchases. New drivers get a tax break on their driver’s training. Members of the military don’t pay taxes on the stuff they buy in the stores on military bases in Michigan. You don’t pay sales taxes on prescription drugs. And you don’t pay taxes on that afternoon candy bar you buy out of the vending machine at work. There are dozens more examples.
• $8 billion in income tax breaks. Michigan has income tax breaks for members of the military, owners of farmland, Holocaust survivors, and a range of others, most notably the very common personal exemption which saves taxpayers more than a billion dollars a year.
• More than $7 billion in property tax breaks include the common homestead exemption for your primary residence, tax breaks for mobile homes, and even more than a million dollars in annual tax breaks for water softeners.

Has Michigan got a deal for you

From beer to gas to church cars and license plates, Michigan tax law has a deal for someone. Many of the state's tax breaks are tied to income taxes, with residents getting breaks for having children, saving for college and owning a home. But nonprofits, students, military veterans, Native Americans, the disabled and the poor also benefit from tax breaks.

Click on any of the categories below to see how many tax breaks are out there, and how much they cost the state treasury. The numbers were taken from the state's executive budget for 2013 and 2014.