TRAVERSE CITY -- Ray Franz's small grocery store got "clobbered" with a four-fold tax increase under the new Michigan Business Tax.
Then state lawmakers added insult to injury when they gave one of his competitors a major tax break.
Franz's Bear Lake IGA and other small businesses statewide received a tax hike, courtesy of state lawmakers, who were much more benevolent to Meijer Inc., which landed an $8.5 million tax break.
The Grand Rapids-based retail giant wasn't the only special interest to receive a targeted tax break, but it was the only business intentionally singled out to receive a special tax break above and beyond its retail industry competitors.
"Meijer's tax break really hurt us small grocers because it gave Meijer a further advantage," Franz said.
State Rep. Howard Walker said neither the state's precarious financial situation nor exposure of Meijer's illegal campaign activities in Acme Township led to any talk of revoking its tax credit, known as a "carve-out," in Lansing.
"It wouldn't surprise me if a number of lawmakers still didn't know that those carve-outs were in there," said Walker, a Traverse City Republican.
Walker said some of his colleagues praised him for opposing the tax cuts, and he was a guest on a Detroit-area radio station after the Record-Eagle broke the Meijer tax credit story in March.
But interest among fellow lawmakers quickly fizzled. Walker's Lansing colleagues also didn't take much notice when Meijer admitted it violated state campaign finance laws by secretly funding an attempted recall of the entire Acme Township Board in 2007 and illegally meddling in a 2005 township referendum.
"The lesson we learned from it is that more people need to stand up and demand that the process be deliberative and more open," Walker said.
The tax breaks didn't go through the regular committee process. They were inserted at Meijer's request by Gov. Jennifer Granholm and leaders of the state House and Senate as they drafted final versions of the new Michigan Business Tax late in 2007.
From Oct. 31, 2006, through the end of 2007, Meijer's PAC spread almost $140,000 to Republican and Democratic politicians, Michigan campaign finance reports show. The Meijer PAC gave Democrat Granholm's leadership fund $17,000; Republican Senate Majority leader Mike Bishop's political funds $23,000; and Democratic state Speaker of the House Andy Dillon's political funds $14,500.
Walker would like to see the state reconsider all the special tax breaks it hands out, or at the least publicly debate them in committee.
Franz, who unsuccessfully sought a seat in the state House of Representatives, said Michigan is never going to attract business if it keeps naming winners and losers in the tax game.
"It makes the state undesirable in general, because I know if I end up a loser, I'll get clobbered while my competitor may get the benefit of my taxes," Franz said.
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