Monday, November 26, 2007

Ax the Tax Update

I am writing to you either because you sent me a note asking me to repeal the 6% tax on services, or because I know you are concerned about rising taxes on businesses and individuals in this state. I thought it would be helpful to give you an update on what is happening in Lansing.

As I write this letter on Monday, November 26, we are sitting on the House floor waiting for action to take place.  While business owners and families wait for action, with their business's success or failure literally hanging in the balance, we sit here on the House floor doing nothing.
We are in a state of paralysis.  Why?  Apparently, "leadership" can't decide what to do about the Presidential Primary election "fix" and whether or not to attempt to put a change in legislative term limits on the ballot. The fix involves putting all the Democrats names on the ballot, even though most of them have agreed not to campaign here. The term limits question is regarding allowing legislators to stay in one chamber 12 years, rather than the current situation where you are allowed a maximum of 6 years in the House and 8 years in the Senate.
There is not likely to be anything done on the service tax issue today.  Will it be done this week?  Hopefully.  Right now, we have a House passed version which repeals the service tax and replaces it with a 33% surcharge on everyone's Michigan Business Tax liability, (just figure out your MBT bill and add 33%).  The surcharge would be capped at $2 million, so large corporations like GM, Ford, Kellogg's and the like would see their tax liability reduced.
The Senate passed a repeal and replaced it with a 13% surcharge on the MBT and a cap of $7.5 million. They also would use a $220 million "windfall profit" from the transition to MBT from the SBT and spread it over three years, lowering the tax liability for all.  Meanwhile, December 1st still looms as the date the service tax takes effect.
Regardless, whether we end up with the Senate or the House version, we are still raising taxes at least $560 million.  We would just hit businesses with a brick instead of a two-by-four.
Just to be clear, I have never voted for a tax increase or a fee increase, for that matter, (unless it was shown clearly that the fee was for an actual service rendered). I believe there is plenty of opportunity to reduce government spending, we do not need to further burden our state's struggling businesses with another tax obligation. Michigan has a 7.7% unemployment rate, 1.6% higher than the next nearest state. We need economic recovery and prosperity.  Everyone knows you cannot tax yourself into prosperity.
Want to track what happens?  Read my blog for the latest updates from the House floor.

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