You might say the new Michigan Business Tax was born under a cloud and with an unnecessary "birth defect" that now has the state's business community up in arms. So how did we get here?

First, a quick recap: Last year, faced with a billion-dollar deficit and threat of a state government shutdown, the legislature passed and Governor Jennifer Granholm signed a new Michigan Business Tax.

The tax won initial. But weeks later, the deficit-fighting legislature tacked on an incomprehensible, inexplicable and unenforceable tax on a bizarre assortment of services, such as fortune-tellers and baby-shoe bronzers. The business community rose in wrath. What they most worried about was that once there was a tax on any services, there soon might be a tax on all services. So at the last minute, thanks to business pressure, the service tax was repealed.

To make up the lost revenue, a 20 percent surcharge was then hastily tacked on top of the Michigan Business Tax, which took effect Jan. 1, 2008. Now tax bills are finally going out, and there's lots of howling going on — much of it legitimate. Some businesses are bitterly complaining their tax bills are double or triple what they used to be under the old Single Business Tax.

How did this train wreck happen?

A few days ago, I received a lengthy e-mail from a Republican lawmaker (who wishes to remain anonymous) but who offers some valuable insights. Bottom line: "The service tax was the direct result of the brinksmanship of the GOP leadership in negotiations and (the) lack of GOP members (in) responding to the requests of their traditional supporters in the business community."

That’s pretty stunning — and here's my attempt to put this all into context: Leading up to the critical votes, both the Michigan Chamber of Commerce and the Detroit Regional Chamber tried to persuade legislators to pass an income tax increase big enough to cover the entire deficit.

Why? Simple: To avoid additional business taxes. The House of Representative figured it out. There, Speaker Andy Dillon and other leaders tried repeatedly to pass a 4.7 percent income tax that would have resolved the budget crisis without resorting to the service tax.

But neither Senate Majority Leader Mike Bishop nor House Minority Leader Craig DeRoche was willing to step forward. They urged their members to hold back and let the Democrats take the political hit for a vote for more taxes. At one point, it looked as though there were as many as 10 Republican representatives ready to vote for an adequate income tax hike, but DeRoche wouldn’t budge.

That was too bad for all concerned. In the end, the attempt to construct only one difficult vote for legislators – an income tax increase sufficient to resolve the budget crisis – failed. Instead, it left lawmakers with three tough votes: One for a smaller increase in the income tax; one for a service tax (that was repealed before it took effect): and one for a 20 percent surcharge on the new business tax.

Since no lawmaker wants to cast difficult and risky votes, it's hard to see how forcing three tough votes was better than one. But that was the political "new math" calculus in Lansing at the time.

And it produced a bitter brew.

My legislative source concludes, "The brinkmanship game of the leaders led to a much worse result for the state. … Republicans need to know that the negotiation and political games led to higher taxes and more revenue to grow state government. Pretty high price."

High indeed. At the end of the day, everybody wound up worse off. Lawmakers, both Republicans and Democrats, had to make three tough tax votes when one would have sufficed.

Businesses are now struggling with a 20 percent surcharge on the new MBT. And the state still faces chronic structural budget deficits – deficits the present tax structure make virtually inevitable.

And the anti-tax fringe, namely the folks who are now trying to recall Speaker of the House Andy Dillon (D-Redford) got a new lease on life. Remember, they started out by going after any lawmakers who supported any tax increase, whether Republican or Democrat. Once they discovered there was limited support for recalls, they dropped all the other efforts and only went after Dillon.

The bottom line: Basing a policy for governing on political expediency turned out to be the worst possible outcome. Worst, not only for legislators who are now regarded as nincompoops by their constituents and the news media but also for the state as a whole.

This sorry tale illustrates all too well one of the worst aspects of our dysfunctional political system, Namely, a wholesale preference by both parties for scoring political points instead of concentrating on rational, long-term government for the state.

If we're going to dig ourselves out of the jam we’re in, this has got to stop. And we all need to find ways to express that — and to get the word to those we elect and pay to represent us.

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Editor's Note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics, and a former chairman of the Michigan chapter of the Nature Conservancy. He is also the founder and president of The Center for Michigan, a centrist think-and-do tank which publishes the Michigan Scorecard. The opinions expressed here are Power's own and do not represent the official views of The Center. Power welcomes your comments at ppower@thecenterformichigan.net.