A Better Michigan Future Calls for Tax Reform & Increased Taxation to Cover Deficit

A Better Michigan Future Calls for Tax Reform & Increased Taxation to Cover Deficit: From the RedTape Blog

A newly formed coalition of education, labor and social service agencies calling itself A Better Michigan Future said this morning the state should reform its tax structure and raise nearly $3 billion a year in new revenue rather than relying on spending cuts to balance the budget.

The group said Michigan's tax code is antiquated and unsustainable, leading to revenue shortfalls that are doing irreparable harm to public schools, health programs and aid to senior citizens.

It called on Gov. Jennifer Granholm and the Legislature to:

• Close tax loopholes for business to raise $600 million.

• Impose sales tax on what the group's leaders called "luxury and nonessential" services (like entertainment, recreation, landscaping and spa treatments), raising $1.65 billion.

• Reinstate inheritance taxes to raise $100 million.

• And seek voter approval for a graduated income tax that would raise about $600 million a year in new revenue.

The graduated income tax would have a top rate of 6.9% for high wage earners, with others paying the current rate of 4.35%, and lower income earners paying 3.9%.

Sharon Parks, director of the Michigan League for Human Services, said, 'The handwriting is on the wall. We've got a tax structure that just doesn't work for the 21st Century.'

Other members of the coalition said Michigan schoolchildren will be left behind in the global economy and that vital health programs will be lost if elected officials choose, instead, to cut programs rather than raise taxes.

While program cuts may provide short-term savings, Michiganders will suffer in the long run if they are less healthy and less well-educated, said Ken Fletcher, of the Michigan Nurses Association.

Granholm and top lawmakers are scheduled to meet again this week in an attempt to resolve differences over how to address a potential $1.8-billion state budget deficit in 2010.

Although some elected officials, including Granholm, have expressed interest in eliminating some business tax exemptions, none of the top leaders has endorsed any broad-based tax increases.

For the full article, see Dawson Bell, 'Granholm urged to raise taxes to balance budget; Group says tax structure is outdated', Detroit Free Press, September 2, 2009.

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