As competing interests fight in Lansing, battle lines and plans seem to be emerging. We see evidence of so-called “good faith” in the Democrat House where Speaker Dillon is moving Republican-sponsored reform measures. I wonder if this would have ever happened if Sen. Majority Leader Bishop had already capitulated on increasing taxes? Meanwhile, there is some talk of putting on the ballot in 2008 an amendment to the state constitution to allow for a graduated income tax. While I like the politics of putting such a question on the ballot in an election year, I think the concept is just too clever for its own good. The crisis is now and we need to solve it now, and we can’t drag Michigan through this process for another year and a half even if it does help get Republicans elected.
Having said all that, I would like to suggest a possible alternative — a different 2 cents solution. Go to the ballot in November of this year with two alternative plans — one to create the graduated income tax and another that increases the state sales tax from 6 percent to 8 percent and does not replace the SBT. I realize the numbers aren’t current, but figures available on the Citizens Research Council of Michigan say that the sales tax brings in about $1.1 billion annually for every 1 percent of the tax. So an additional 2 percent would net $2.2 billion. The SBT brings in a net of about $1.9 billion, leaving about $300 million to address other budget needs. I would call the first option, the “Status Quo” option that simply asks the taxpayers to foot the bill for the government’s current spending habits (or should I say addictions). The second option is more visionary and sets Michigan up as a state that welcomes investment and new jobs. I think citizens would be willing to pay an additional 2 cents on every dollar to eliminate the SBT and reinvigorate our economy. Of course, it goes without saying that this 2 cents solution must also be accompanied by fundamental reforms in government spending. The legislature should put the two proposals on the ballot, then let the advocates line up and make their cases. Ultimately the people will decide Michigan’s future.
May 23, 2007 at 10:48 pm
What the writer fails to understand is that our economy has changed and just raising the sales tax on good keeps us in a lose lose loop.
Given the fact that everyone should contribute to maintaining our civilization, it is proposed that an across the board 5 percent sales tax be implemented on goods and services, including food and medicine. And that’s my 2 cents, get rid of the pennies and and standardize to 5 percent, however, after you crunch your numbers, we may be able to get by with a flat 3 or 4 perenct tax. KISS
May 25, 2007 at 2:37 pm
Wayne,
Nobody here disputes that some taxes need to be paid to keep our civilization running. The argument is over how MUCH taxes we need to pay. My question: If we are in such a terrible budget crisis, why is spending increasing at a rate much faster than the rate of inflation and population growth?”
In an email dated May 24, 2007 Saul Anuzis provides some budget information:
” . . . following last Friday’s revenue estimating conference, state fiscal experts pegged current General Fund spending for fiscal year (FY 2007) at:
$8,804,300,000.00 (Source: House Fiscal Agency)
Governor Granholm’s budget for this year – mirrored in budget bills moving through the state House – calls for spending in the General Fund (FY 2008) of:
$9,610,900,000.00 (Source: Governor’s Executive Budget Recommendation for FY 2008)
Today, House Democrats are poised to vote on a plan to raise people’s income taxes, a move that would bring to Lansing next year:
$900,000,000.00 (Source: House Democratic Policy Documents)
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Increased state spending: 9.1 percent (Source: HFA and Executive Budget Recommendation)
The current Consumer Price Index: 2.1 percent (Source: Consensus Revenue Estimating Conf.)
The Democrat’s proposed hike in the state income tax: 18 percent (Source: House Bill 4500)”