Tax reform: panacea or distraction?

Author:Williams, Brad
Position::VOTE4BIZ
 
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After completely replacing that state's main business tax in 2007, is Michigan prepared to take another serious look at its tax structure? Some in the Legislature think now is the time to radically change the way Michigan taxes. Leadership in the State House of Representatives have made it their personal goal to push through major tax changes this year with an eye on improving the business tax climate in the state. Of course, the Michigan Business Tax (MBT) surcharge, which was tacked on after the outcry over the middle-of-the-night deal that imposed a service tax on things from lawn service to baby-shoe bronzing, is a number one target. Business groups think that an even more productive goal would be to make the state's business tax burden one of the top 10 in the nation. This would mean an overall business tax cut of over $2 billion.

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The key problem with tax reform is that the crafters of a plan in the Legislature will come up with something "revenue neutral," meaning it will not impact the state's budget either positively or negatively. The trouble with reform that is "revenue neutral" for that state is that it is never "revenue neutral" for taxpayers. Rumored items to help pay for a cut in the MBT have included the introduction of a graduated income tax (which would require a constitutional amendment) and reintroduction of a plan to extend the sales tax to services...

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