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Tax expansion necessary to keep Mich. afloat

Originally Published: 02/15/10 6:40pm Modified: 02/15/10 7:10pm 19 comments

As the Michigan economy continues to sink deeper into the sea of financial instability, the state must turn to radical means to right the ship. And that is just what Gov. Jennifer Granholm would like to do with her new, broader sales tax.

Thursday, Granholm unveiled her new tax plan that would drop sales tax from 6 percent to 5.5 percent while extending the new rate to many consumer services.

The initial revenue increase would be directed toward the $423 million school aid budget deficit on top of the $1.2 million overall shortfall for the fiscal year beginning Oct. 1.

Under the new proposal, several service areas wouldn’t be under the tax, such as health care, education, real estate and services directly connected to business operations.

It is great the governor is taking extreme measures to cut the budget deficit — what with this tax extension and Granholm’s earlier proposal to urge 46,000 state and school employees into retirement.

They aren’t the most favorable ways to get through and save the state in tough times, but at least she’s making attempts.

It doesn’t appear as though anybody is overly excited about the tax increase, as businesses might see a shortage of customers as prices increase. But Michigan citizens need to realize this tax has the potential to help us get through the state’s financial crisis.

As long as Michigan residents realize they are helping the state balance the budget and continue to purchase the same goods and services as before, the tax proposal can work out for the benefit of everyone.

Granholm said the revenue increase from this tax expansion will keep funding to the state’s pubic education at the current level.

If the state doesn’t come up with a way to raise the money, the students of Michigan could see a greater deficit in funding. Keeping schools funded should be enough of an incentive to pay the tax on services.

A tax on services such as a haircut likely won’t discourage a moptop from trimming his locks, but there certainly are larger services out there that might take a hit if consumers are forced to pay an extra few hundred dollars in additional taxes.

Granholm and state lawmakers enacted a similar expansion of sales tax in 2007 but repealed it a few months later because businesses were displeased with the taxes and were not supportive of the increase.

The plan didn’t exempt business-to-business services like the new proposal, which was the main concern in the past. Hopefully the state pays attention to the affect this tax will have on businesses.

It could be disastrous if, this time, the state implements the tax expansion and simply walks away from the situation. If the tax is enacted and doesn’t work, the state strongly should consider other options.

Although opponents aren’t likely to fully accept Granholm’s proposal, they should understand that it is important to get through the tough times and help pass this proposal.

But it’s also up to the Democrats to enact this plan with responsibility to ensure it works to its fullest potential. If the two sides cannot pass this proposal, something drastic still needs to be done to generate revenue.

If everyone in the state works together — from the lawmakers to businesses to residents — this tax expansion might be a way to turn Michigan’s economy around.


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Commentary

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George Cushingberry
(02/15/10 9:25pm)
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That’s right, because when I pushed to raise the state income tax from 3.9% to 4.35% for fiscal year 2008 all of our budget troubles were permanently solved! Communism rules!


Murray Rothbard
(02/15/10 10:25pm)
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This is such a wonderful idea. I would have never thought a tax hike would revitalize the economy. Simply brilliant.

Nobody knows how to spend your hard earned dollars better, wiser and more efficiently then the government!


Wonders never cease
(02/16/10 12:36am)
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Cut all local, state and federal taxes to zero. Demand, repeat, demand no cuts to any services at any level. If they can’t do the job, draft people who can and send the failures to security prison. ‘Bout right?

Oh, and free food for my cat.


Todd
(02/16/10 8:13am)
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Well, let’s see. Jenny and the legislature have consistently and irresponsibly insisted on spending more than the state takes in, thereby creating the false dichotomy that a tax increase is “necessary.” They refuse to address any real reform ideas that would decrease spending and continue to rob peter to pay paul, especially through a myriad of corporate welfare schemes. And can anyone really take Jenny and the Lansing dolts seriously about fiscal matters while the state owns its own ski resort?

When is the last time they raised taxes? October 2007, by $1.4 BILLION.

How much has unemployment gone up since then? More than 100 percent.

How’s that working out for ya?


Wonders never cease
(02/16/10 9:24am)
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Lots of the “tax cut” proposals are really “privatization” plans. Gosh, Grand River Avenue used to be a pay-as-you-go operation with toll gates — suppose we bring that back, so the private operator can tax without representation.

Have you noticed how there’s already a national sales tax, run by Visa and MasterCard, but they call it a “rewards plan” and keep much of the money for “administrative costs” … just one more indication of where the tax cutters want to go. Yeah, sell the State lands and waters to private operators, and sell the prisons to the Red Chinese. Heck, sell the State legislature to the highest bidder — or did somebody already get that one?


kev
(02/16/10 9:38am)
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if i trusted our state government in how they were spending our money, I’d be for broadening the sales tax. As it stands, this is not the case. Give me the budget, Ill balance it without revenue surplus. I guarantee.


Todd
(02/16/10 10:18am)
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kev,

Anyone with half a brain could balance the state budget without having to raise taxes. But we’re talking about the governor and legislature here. They lack both the intellectual capacity and honesty to handle any of this properly.


Mr Anonymous
(02/16/10 11:41am)
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One of the craziest contradictions I see in this USA is the large amount of people protesting paying taxes, and yet support big military spendings and almost no help toward poor people. But give tax breaks to big corporations that contribute so little for the benefits of the country. Hearing a fat guy named Mr. Limbaugh and a racist, Glenn Beck, making these preposterous commentsm, too. Seem to forget these people one small thing: if they want USA continues as a “superpower” and fights wars for the “lifestyles’ they favor, take lots of money and spending. And how do you get that money? Taxes! Stupidity is so widespread in this pathetic USA?


Jason
(02/16/10 12:35pm)
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Mr. Anonymous, I think you should change your name to Mr. Oblivious.

I’ll ignore the fact that you seem incapable of separating Federal from state taxes. Michigan loves to dole out money to the poor. Our Medicaid system is corrupt and bloated. We support unemployment benefits for a ridiculous amount of time. We fund state fairs and festivals. We dole out money to art museums that no one visits.

As others have said, get a group of citizens together and you’ll find the budget balanced quickly. Of course, you’re going to lose a lot of handouts that people rely upon. But that’s the REAL compromise required to get us back on track.


Todd
(02/16/10 12:58pm)
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Mr. Oblivious,

The fact that politicians irresponsibly spend the far too high amount of taxes they now take from us – be it at the local, state or federal level – is not an excuse for them to take even more.


J. Tedward Remlett
(02/16/10 1:55pm)
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MORE taxes ?!?!?!?

typical democrat solution.

it never works.


9th and 10th Amendment
(02/17/10 2:05pm)
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No Federal Taxation Without Representation! Halt all federal taxes, and let the state governments perform all functions of government. The current federal gov’t uses our tax dollars to murder minorities around the world.

Yes, we do need a strong national DEFENSE, not OFFENSE. Keep the money for state National Guards, and don’t ever let the fed wage a foreign war EVER again!


First Foreign War
(02/17/10 2:12pm)
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How many foreign wars did the United States wage in the 19th century? 1898, the Spanish American War, and that was the beginning of corporate control and media propaganda institution tyranny on a casual daily basis.

The formation of the U.S. Navy and the protection of the merchant marines against the Barbary States by Thomas Jefferson was not a foreign war, there was no invasion.

Foreign Wars:

Spanish-American War 1898

WWI 1917-1918 (as it pertains to U.S.)

WWII – 1941-1945

Korea – ’50s

Vietnam -‘60s and ’70s

CIA orchestrated Iran-Iraq War – 1980-1988

Panama – ’80s

Gulf War (Op. Desert Storm) – 1990

Yugoslavia – ’90s

Mogadishu (?)

Afghanistan (Op. Enduring Tyranny) – 2001 – present

Iraq (Op. Arab Genocide) – 2003 – present

Yemen – they’re trying

Iran – they’re trying

Georgia and Russia – they tried

(future) Tanzania and Sudan – they want to keep China away from African oil.


OldTimer
(02/18/10 1:30am)
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Yup, no foreign wars in the 19th century before 1898. Excepting those ones that you didn’t count.

Most of the wars of USA expansion were “foreign” until we won, and occupied the conquered territory. And those “Halls of Montezuma” in the song? As in, Mexico City? And that war with the British in 1812-1815?
Anything foreign about those British who burned DC, or the several USA attempts to invade Ontario?

One can even say that the USA Civil War was a foreign war, not only because the South considered itself a new nation, but also for their naval support by Britain.

If F.F.War can post a list that includes “they’re trying” as evidence of a state of war, then s/he should count 19th-century hyperviolence by the same weak standard.


Mr. Anonymous
(02/18/10 10:30am)
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I stand on my comments. “Mr. Oblivious”? I have been said worst things in other forums. Love that one.


MaximumBob
(02/18/10 11:33am)
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Mr. Anonymous,
Shouting “Limbaugh” and “Beck” is not a substitute for a good argument.

Corporations contribute “so little” to the country? From where do you think American jobs eminate? Corporations – large and small – hire workers, produce goods and services, and pay taxes.

Are you of the mind that it’s the government (and taxes) that create (or save) jobs?

And, if you’d actually pay attention, people aren’t protesting paying taxes. They’re protesting SPENDING, like a $787 billion “stimulus” bill that’s being used to shore up state pensions and budget shortfalls, instead of actually creating jobs.

Let Granholm and Michigan CHOKE until they get spending under control. Going back to the taxpayer for another turn at the trough is a non-starter.


KJ Green
(02/18/10 3:51pm)
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Mr. Anonymous, please substantiate your assertion that the large amount of people in the USA “support big military spending and almost no help toward poor people.” I can’t substantively dispute your assertion, but I can tell you my perspective what I feel the general sentiment of people is regarding some of your assertions. We do not support carte blance military spending, however, we are not naive enough to think that we can simply talk our way out of threats to our way of life. We also are not unsympathetic to the needs of poor people.

We are, however, fed up with the fact that the government has created a recipient class, whose only job is to collect government largesse. (Exhibit A: the lady in Detroit who lined up to get some of “Obama’s stash.”)

We are fed up with the fact that our government, however well-intentioned, has implemented programs that have not achieved their intended results, yet they do nothing to revoke such programs or spending (Exhibit B: LBJ’s Great Society and its objective to eliminate poverty).

We are fed up with the fact that our government cannot live within its means, when only a fraction of the behavior they exhibit would land the ordinary citizen in jail. Their behavior is orders of magnitude worse than even the likes of Bernie Madoff. (Exhibit C: their conversion of Social Security / Medicare tax revenue to fund general expenditures — we’ll replenish it later and nobody will be the wiser.)

We are fed up with the attitude that the only solution is to raise taxes. I haven’t done an analysis, but I bet that if you looked closely at historical behavior, you would find hundreds of examples of government spending more than the revenue it had (thus causing the need to raise taxes) and only few examples of where hard decisions were made to spend within the means. Further, if government would demonstrate an iota of good stewardship of additional revenues, we might be more inclined to support requests for temporary tax increases.

You are correct in your comment that “Stupidity is so widespread in this pathetic USA[.]” However, it is the past stupidity of us citizens who have only recently woken up to challenge the current stupidity of our government leaders and its recipient class.

When the recipient class outnumbers the producers, what then?


YEEEEAHHHHHHH
(02/22/10 8:29pm)
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Lets tax the SH*T out of these people so they ALL WANT TO STAY IN MICHIGAN! WOOOOOO! WE RULE! STAY HERE, IT’S WORTH IT!!! YEEEAAAHAHHHHH!!


Brice
(02/28/10 4:28am)
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Nail on the head KJ…