Now that the Lansing budget battle has degenerated into bitterness and brinksmanship, it’s too late for lawmakers to pull back and retrace their steps.No, it doesn't look so bad, and I said that way back in February. Of course, my opinion didn't count, not that it matters. Republicans never wanted a solution. They only wanted to make Granholm look bad.
But somebody has to say it: The 2-cent tax on services that was proposed by Gov. Jennifer Granholm doesn’t look so bad now, does it?
So, here we sit seven months later on the verge of a state shutdown and this editorial comes to the conclusion that Granholm was right after all, and they give lots of solid arguments to back up their reasoning.
The prospect of an income tax increase has taxpayers up in arms and legislators cowering in fear. Yet, I think we all realize that we’re going to see an income tax boost to 4.6 percent when this melodrama ends.The GOP failed the citizens of Michigan in their zeal to make Granholm look bad. Was it payback for her punishing win over DeVos? Possibly. Whatever the reason, they need to be held accountable for playing politics instead of working and booted out of office next time around.
Compared to the finger pointing and gnashing of teeth in Lansing over the past 10 days, I think the 2-cent tax would have been an easier sell to the constituency — and easier for lawmakers to swallow.
Which would you prefer, a bigger bite out of your weekly paycheck or an extra two cents on the dollar when you get your hair cut or play a round of golf ?
When Granholm proposed the services tax in February, she claimed it would cost the average family just $69 a year. That was probably low, but even if the price tag was $100, that’s about one-third the cost of a higher income tax. [...]
It was a broad-based tax on about 120 services, meaning it would have brought in a lot of money paid by tourists and visitors to Michigan. It would have better reflected the new economy, with service industries emerging as a large and growing sector. It probably would have had minimal impact on Michigan’s national reputation in the business community, since most states already tax a wide array of services.
Most importantly, it would have levied taxes on “discretionary” spending rather than hitting workers’ paychecks. Those who choose to pay for a health club membership or prime seats to a Red Wings game would know that a 2 percent levy was attached.
Anti-tax activists say that people in Michigan are hurting and can’t afford a tax increase. Well, those who are hurting don’t spend money on pedicures and tanning salons and expensive concert tickets. In fact, I suspect low-income families would barely feel the pinch of a tax on services.
In addition, the 2-cent tax would add some symmetry, some logic, to Michigan’s tax system. Why, when we go to a golf course pro shop, should we pay taxes on the purchase of golf balls but not on a round of golf ? Why, when we go to a salon, should we pay taxes on hair-care products but not on a hair cut? [...]
It’s important to remember that the 2-cent tax would have generated $1.5 billion, more than what’s now needed if cuts and reforms take hold. Some controversial levies could have been eliminated from the list of taxable services, or the tax could have been whittled down to a mere 1.5 cents.
But that’s now all hindsight, with our legislators flailing away and embarrassing our state. This whole budget battle could have been avoided if Granholm’s tax had been recognized months ago as a better alternative to a higher income tax.