LANSING – The tentative agreement on taxes for the 2011-12 fiscal year budget between Governor Rick Snyder and top legislative leaders came under withering criticism from Democrats, advocates for the poor and the AARP as an insult to the state’s seniors and working class, but business groups praised it for dramatically improving the state’s business climate.

“The Republicans are putting a fresh coat of paint on the same plan to balance the budget on the backs of seniors, working families, and students while giving billions away to big corporations,” Senate Minority Leader Gretchen Whitmer (D-East Lansing) and House Minority Leader Richard Hammel (D-Mount Morris Township) said in a joint statement.

“This new proposal blatantly violates the governor’s very own ‘simple, fair and efficient’ ideal. Their revised plan is nothing but a bait-and-switch that offers little relief in exchange for yet another tax increase on residents. It does nothing to resolve the concerns and frustrations that have brought people to the Capitol by the thousands in recent weeks to voice their opposition to his agenda. We also question the amount of revenue this plan will actually generate since the bulk of the revenue raised from the pension tax comes from hitting the lowest pensions.”

With that statement, the Democratic leaders in the Legislature made clear that the Republican majorities in the House and Senate will have to produce the 56 and 20 votes, respectively, to pass the deal.

The revised pension tax failed to assuage AARP-Michigan.

“They’ve changed the numbers, but the policy that we’ve opposed from the beginning is still the same,” AARP-Michigan spokesperson Mark Hornbeck said. “Increasing taxes on seniors to pay for a business tax cut while still reducing services that will diminish quality of life in this state.”

Further, Hornbeck said while the plan would be an improvement for those 67 and older, who would see no change in how their pensions are taxed, the age-tiered concept runs afoul of the national AARP’s support for broad-based non-discriminating tax policy.

Advocates for the poor blasted the decision to include Snyder’s proposal to repeal the Earned Income Tax Credit, especially Snyder’s comments that boosting the Homestead Property Tax Credit for those with household income up to $20,000 was an offset for repealing the EITC.

“For these politicians to think that low-income families would trade the Michigan EITC in exchange for a few pennies in tax credits for rent is indefensible,” said Gilda Jacobs, president and CEO of the Michigan League for Human Services, in a statement. “Ending the EITC will throw 14,000 innocent children into poverty, with long-term consequences to the state.”

The liberal organization Progress Michigan said the deal still contains the fundamental flaw of Snyder’s original proposal: using revenues raised either through new taxes on low- and middle-class taxpayers or the elimination of credits claimed by them to fund a $1.8 billion business tax cut.

“Governor Rick Snyder and the Legislature want to saddle the tab for billion-dollar corporate tax breaks on the backs of seniors, low-income families who work hard and on our kids’ education,” Progress Michigan Executive Director David Holtz said. “Michigan citizens deserve better than a budget that picks a few winners and leaves too many families behind.”

But business organizations lauded the deal.

“There is no doubt in my mind that small business owners will use the tax savings in this plan to hire workers and grow the Michigan economy,” said Rob Fowler, president and CEO of the Small Business Association of Michigan.

“The MRA is proud to support this plan and we applaud these leaders for coming to an agreement on this critical issue,” said Andy Deloney, vice president of public affairs of the Michigan Restaurant Association. “The plan will jumpstart our economy, provide confidence to small business owners, and help lead to increased investment by employers in new and expanded businesses in Michigan, economic growth, and more jobs.”

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