SEARCH BLOG: MICHIGAN and TAXES
Also see:The idea of a 2% service tax is appealing to Michigan's Governor Granholm because it avoids having to deal with limitations on taxes that the citizens of Michigan voted into their state constitution. Property tax increases are capped to the rate of inflation... a message that government should learn to live within constraints. Sales taxes are capped at 6%... a message that government can share in good times, but not grab a bigger share in bad times.
Apparently, the message is being ignored.
Besides ignoring the will of the voters with regard to taxes, the Governor has proposed a tax that is likely to be a source of a giant accounting and administrative mess. Are the taxes only applicable to retail transactions or also applicable to business-to-business services? Sales taxes can be audited through inventory records. How do you audit the number of lawns cut or heads of hair cut? The "proof of transaction" disappears in a few weeks.
This seems like a natural incentive to move toward a cash-transaction marketplace. Rather than be satisfied with taxes on the incomes of service providers, the Governor thinks that they ought to collect a fee for the service provider's privilege of earning that taxable income. More than likely, some part time service providers will "go out of business" as far as the state is concerned rather than deal with honestly reporting those extra-hours dollars.
Why not increase fees for government services, as well? How about $1,000 to renew a vehicle license plate? Got to fix the roads. How about a $1,000 enrollment fee for schools... the education is still "free", but the schools need repairing. How about a $1,000 annual fee for filing your taxes? Taxes need to be collected and checked. Can't afford the fee for the license plate? Ride a bicycle or take a bus. Can't afford $1,000 each to enroll your kids? Home school them. Can't afford a fee to pay your taxes? Pay it anyway... you have to pay your taxes.
Fees aren't really taxes, so no one would object to a fee for the real necessities. Would you? I'm sure the Governor wouldn't. Just call it "pay for play" or something like that. The state would just be ensuring that you pay your fair share for the benefits received. Oh, and if you should die in Michigan, maybe the state could have a $5,000 fee for a death certificate. After all, it would be their last chance to collect from you.
Or the State could learn to live within the means of the voters... as the voters have declared.
My comments regarding agreement and disagreement with the Governor:
Where I agreed with the Governor:I sent an email to the Governor via the State's website to this effect and suggested that she contact Dr. Steven Levitt of the University of Chicago who is a brilliant economist and practical problem solver. Perhaps a truly brilliant and insightful mind might see past the fog generated by thousands of less-than-brilliant advisers. Of course, the Governor could thank me for my less-than-brilliant advice, since I set that up so well.
- Contain costs through consolidation of purchasing and other services
- Reduce prison population by alternative sentencing of non-violent criminals (including use of large fines, as feasible)
- Provide incentives/penalties for colleges and communities to contain costs related to state funding
- Re-prioritize budgets to insure basic human services are funded (but not necessarily expanded)
Where I disagree with the Governor:
- Free tuition for workers who have lost their jobs. There is no guarantee that this effort will provide any positive effect for Michigan. Workers are not required to stay and work in Michigan after completion of their studies.
- Directing state agencies to clear blighted areas in cities. Rather than use state resources, offer up the property at no cost to firms that will clear and redevelop the areas with specific performance parameters (time, land use, and design)... this has been done successfully elsewhere.
- Increasing or adding new taxes that will place a greater burden on businesses and residents simply to have the state redistribute the money