2% service tax will backfire on state funds

[cassy1]

That does not make sense! Or I guess it does, money going to the local govt, right? I think it is time that the regular Joe's take back our country, but I guess that is supposed to be listed in another forum.

[tuebor]

Wow. Where to begin...

First of all, I'm still waiting for those of you who oppose the new tax to tell us what public funded things YOU use that YOU would be willing to give up.

Rapunzl, the last congress (the GOP-led one) axed the the single-business tax well before the election, but didn't replace it with anything. Every Michigan voter with any awareness of state finances knew some new tax would have to replace it. Rob Bishop (GOP leader of the state senate) keeps pretending that cuts can make up for this, but his party STILL hasn't come up with a plan that shows how this is possible. As usual, the state GOP leaves the tough decisions and hard work of governance to Jenny G. That's why she's still got the job--she has shown that she can handle it.

Chair, moon's example's may be farfetched, but that's the sort of thing you would have to do if you wanted to fund the government wholly with user fees. (I don't have kids--does that mean I shouldn't pay taxes to support the schools?) If we're going to realistic, we might be able to add a few fees here and there, but we're never going to be able to balance the budget that way.

Turnpikes make sense for IL and PA because those states get a lot of "drive-thru" traffic--folks just going through the state on the way to someplace else. MI gets much less of that for obvious reasons. Michigan's universities are already more expensive than surrounding states, and smart low-income students are getting priced out of a postsecondary education at a time when it is more necessary than ever. Anyway, whether we have user fees or taxes, we're still increasing state revenues.

Higher user fees on roads and parks would also hurt tourism. We want to encourage people to come here, not scare them off with higher fees, and when they come, we want them to spend their money in shops and restaurants, not on fees to the state.

As for the fairness of progressive taxes, progressive taxes are more fair for two reasons. (1) A flat tax hurts poor people more than rich people, and (2) rich people get more out our current economic and political arrangements (especially those who inherited their wealth rather than earned it) and therefore should pay a higher proportion of their income to support it. To understand (1), let's compare some with $10,000 taxable income vs. someone with $1,000,000. With our flat tax of 3.9%, the poor person pays $390 while the rich person pays $39,000. The rich person pays more, but that $390 is a lot to someone who lives paycheck to paycheck, while $39,000 will not significantly affect the lifestyle of a millionaire at all. If we doubled the millionaire's tax, he could still afford a big house, cars, vacations, retirement, healthcare, Ivy Leagues colleges for his kids, and fat contributions to his favorite politicians (and I'm not saying MI would need to hike it that much to balance the budget--this is just an example). If we increase the tax on the poor person by even 1%, he may have to choose between groceries and the heat bill. As for (2), if people have serious doubts about this, I'll take it up on another thread when I have time.

People really should look at interstate comparisons before they complain (there are lots of sites that do this on the web--do a search). All the ones I've looked at suggest that MI is in the middle when it comes to taxes. Taxes here are not excessive.

Oh, and as for the "People's Republic" comment-- I hope that was just a witty exaggeration and wasn't an insinuation that I'm some kind of communist or socialist just because I think we all ought to contribute our fair share to maintain a public sector that we all benefit from.

[horizons202]

Originally Posted by cassy1

We moved out of Michigan but I am inquiring because my children still live in Michigan. Does this mean that the sales tax will now be 8%?

No, the 2% will not be a sales tax. It has to be called an excise tax -- a tax on services, etc. If Jenny tried to make it a 'tax' she'd have to get voter approval, because of the Headlee Amendment and Proposal A (1992). She knows the people would vote it down....

Michgian is in the sewer...and I know, I live there

[Mi_Mom]

Originally Posted by ChairborneRanger

Well, some of the examples which you cite are just a bit far fetched.

Haven't most folks heard of things called user fees----as in "he who uses it, pays for it"? Start charging fees for entering parks (that's what the Federal Govenment does for the National Parks), charge for highway usage (ever heard of things like the Illinois Through Way, the Ohio or Indiana Turnpike?), or, how about increased Driver's License Fees, License Plate Tabs and Higher Tuition at State Colleges and Universities?

Michigan is in TROUBLE economically----and about the last thing it should be doing is raising taxes.

Speaking from someone who just had to renew plates I think they are horribly expensive! I just renewed 2 vehicles (February) and it was almost $300. Add to that my $40 license renewal for my husband (March) and mine was in February ($18) that is a lot of money. What really irks me is that it seems they don't base it one vehicle weights/age but more on price that you purchased it for. We have a 2006 minivan and a 2003 Avalanche. I honestly think that it should be based on weight/damage possibilities to the road or emissions etc.

[TurboState]

I don't understand why some people are so pro-tax.. Go to New Hampshire and MARVEL at how they can run their state with NO income tax and NO sales tax. Yet their property taxes are magically less than Michigan.

I know that part of the reason is they don't have big poor minority population centers to suck the state dry - thats a big reason actually. But also they are fiscally responsible. Michigan has never been a fiscally responsible state. A 2% tax on services will only come out of tips.. I've already reduced my tipping significantly in recent years. I tip only $2 a haircut, but if the tax comes into play I will just remove the tax from the tip. I no longer tip for carryout, and have dropped my tipping in restraunts to 10%. I stopped tipping the mailman and anyone else like that. Sucks but when we're taxed to oblivion like we are in Michigan, I got to adjust the money from somewhere!

Don't even get me started on Michigans criminal level plate fees. They don't base it on things other states base theirs on. Michigan just takes into account the original retail price, and you pay that for plates for the life of the vehicle. What a scam! My sister pays over $500.00 a year in plates for both vehicles! Thats almost $50 per month just for plates! Even though both of them are 2-3+ years old. I pay $120.00 total for both vehicles, but my car is almost 10 years old, and my wifes is 6 years old. Scam!

Another scam is their little tax on cars.. When you buy a new car you pay 6% tax. When you sell that car to someone else, he pays 6%, when he eventually sells it to someone they pay 6% and on and on and on.. The average vehicle accrues no less than 6-7 sales taxes during its lifetime! Lets look at how much the state makes off a single vehicle; (figuring average prices)

$55,000.00 x 6% = $3,300.00
$35,000.00 x 6% = $2,100.00
$25,000.00 x 6% = $1,500.00
$15,000.00 x 6% = $900.00
$10,000.00 x 6% = $600.00
$5,000.00 x 6% = $300.00

Total Tax on the life of the vehicle: $8,700.00

Average of 12 year life cost of plates over that time for this vehicle: $1,800.00

Total State Revenue from a single vehicle: $10,500.00 *NOT* including the car payment and interest! Anyone else feeling ripped off yet?

[Mi_Mom]

Originally Posted by TurboState

Don't even get me started on Michigans criminal level plate fees. They don't base it on things other states base theirs on. Michigan just takes into account the original retail price, and you pay that for plates for the life of the vehicle. What a scam! My sister pays over $500.00 a year in plates for both vehicles! Thats almost $50 per month just for plates! Even though both of them are 2-3+ years old. I pay $120.00 total for both vehicles, but my car is almost 10 years old, and my wifes is 6 years old. Scam!

Another scam is their little tax on cars.. When you buy a new car you pay 6% tax. When you sell that car to someone else, he pays 6%, when he eventually sells it to someone they pay 6% and on and on and on.. The average vehicle accrues no less than 6-7 sales taxes during its lifetime! Lets look at how much the state makes off a single vehicle; (figuring average prices)

$55,000.00 x 6% = $3,300.00
$35,000.00 x 6% = $2,100.00
$25,000.00 x 6% = $1,500.00
$15,000.00 x 6% = $900.00
$10,000.00 x 6% = $600.00
$5,000.00 x 6% = $300.00

Total Tax on the life of the vehicle: $8,700.00

Average of 12 year life cost of plates over that time for this vehicle: $1,800.00

Total State Revenue from a single vehicle: $10,500.00 *NOT* including the car payment and interest! Anyone else feeling ripped off yet?

I sooooo agree with you! That's what I meant. We have new-er vehicles and pay out the nose for plates. And someone with a giant old 1 ton dually truck that is 10+ years old will pay much less than me. I think my plate for my 2006 Dodge Grand Caravan was $140. That just seems crazy to me.

[M TYPE X]

Michigan doesn't need anything that resembles the Illinois Tollway, Indiana Toll Road, or Ohio Turnpike. If someone stumps for it, ignore them (if they are campaigning) or vote them out of office!