TAX NEWS - JUNE 2010

Detroit Tax: Newt Gingrich, Jennifer Granholm spar over tax-free Detroit proposal

by Nathan Bomey, 03 June 2010 -- Former U.S. Speaker of the House Newt Gingrich proposed Wednesday on Mackinac Island that the state of Michigan declare Detroit to be a tax-free zone for the next 10 years in an effort to generate economic activity.

"Let's pretend Detroit is Puerto Rico for 10 years," Gingrich said, according to a report on MLive.com. "No taxes for a decade on job creation. No taxes on investments. No taxes on capital gains as long as they are in Detroit."

Gingrich's proposal, delivered at the Detroit Regional Chamber's annual Mackinac Policy Conference, spark a wide range of reactions.

Gov. Jennifer Granholm, for one, thinks it's unrealistic.

"The state and local component provide direct services. Nobody's going to come to Detroit if there is no law enforcement," Granholm said on WJR-AM (760), according to the Detroit News. "Is Oakland County going to subsidize Detroit's law enforcement efforts?"

Gingrich also proffered a variety of other ideas for revitalizing Michigan's economy and Detroit, including establishing Michigan as a "right to work" state, giving schoolkids Kindles instead of textbooks and aggressively replacing failing schools.

Some attendees seemed to welcome his ideas. Detroit City Council President Charles Pugh told MLive he liked the tax-free Detroit proposal.

"I'm not a Republican -- I'm the farthest thing from it -- but that's just a good idea," he said. "Some people will tell you Detroit is in a depression. With the level of unemployment. With the high dropout rate.  With so many aspects. We need an injection of not only hope, but jobs.  That's just real.  And what we've been doing has not been working."

Detroit NAACP Executive Director Heaster Wheeler was disgusted.

"Newt Gingrich is less than a joke," Wheeler told the Detroit Free Press. "If he understood the needs of the urban centers of America, where was he when he had the authority to do something about it as speaker of the House?"

On the other hand, U.S. Rep. John Dingell, D-Michigan, didn't write off Gingrich's ideas for Detroit.

"I am thinking about it," he told MLive. "Newt is very provocative, and he's caused me to consider the idea."