New Michigan Services Tax
Tuesday, October 16th, 2007I just found out that Michigan is instituting a new 6% services tax that is supposed to go into effect December 2007. See details here: http://arborlaw.com/blog/2007/10/01/new-michigan-tax-on-services/
Now, I am not an economist, or a politician. However, this just seems ass-backwards to me. Here in Michigan we have the highest unemployment rates, high foreclosure rates, and a plummeting economy. Our state is in trouble. The state is always saying they want to bring more business and jobs to Michigan….but….with this new tax, people will steer clear. Michigan residents are already fleeing the state at a phenomenal rate.
Michigan governments answer? To raise taxes. Last year Michigan introduced a new 4.95% business income tax, which will be applied on top of the sales tax. This year, the state’s personal income tax will rise to 4.35% from 3.9%, and there is a new 6% sales tax on business services.
Speaking from a common sense point of view….how does making things more expensive, for both business and residents, draw in more business and people? It doesn’t. This is just ridiculous.
As it is, there are no jobs in Michigan. In 2004 I was basically forced to go into self-employment. I have not regretted it, it is probably the best thing I did, however, I am hardly doing well. I make enough to barely scrape by. I don’t have health insurance or any other of the benefits of working for someone else. I certainly don’t have a regular paycheck.
Add to this an increase of 6% on all of my service purchases, whether for business or personal use. Add in the increase in personal income tax. Add in the fact that clients will move to someone else to save the 6% tax that I will have to charge them for my services. And also add in the increased accounting required to collect, report, and pay this new tax. Whew! How does this help small businesses or the people who are barely getting by in Michigan?
Granted that Michigan’s economy is largely tied to the auto industry, wouldn’t one think that it is time for Michigan to reinvent itself? Remove that dependency? Hmmm….let’s see, how could that be done? Possibly doing everything possible to bring in new industries? We have a great educational system…why not leverage it and the people who are born from it and go down a different path instead of remaining dependent on manufacturing?
Dunno…perhaps common sense is not a requisite for being a politician.
For more insights and information, please visit the following links:
Michigan Economy At a Glance - US Dept. of Labor
Worst Yet to Come for Michigan Economy - Detroit News
Michigan’s Economic Woes - NY Times Blog
Todays GOP Debate: Its Jobs Stupid! - AOL News (Great stats here - well…scary)
Maryland and Michigan Committing Economic Suicide - Cato-at-Liberty