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Printer-Friendly ModeGranholm's tax proposal calculated, sensible
February 26, 2007 —
Sin taxes. Excise taxes. Vending taxes. Taxes, taxes, taxes, and they're all part of Governor Granholm's plan to balance the state's budget and put Lansing's fiscal house in order.
The reaction of the press and the public has been surprisingly positive, while lawmakers naturally remain divided over the issue. Granholm issued a challenge to Republican legislators last week to develop their own budget strategy, and we are still waiting for a response from the GOP. If its reply includes deeper tax cuts, then the party of Abraham Lincoln should only expect disappointment and resentment from the public.
The tax cuts didn't work. It's perhaps not that simple, as tax cuts certainly can work, but it is now quite clear that the $3 billion that Granholm has cut during her tenure as chief executive has not stimulated the economy like some would have hoped. In addition, schools, police, and corrections facilities are now even more strapped for cash than they were when Granholm first took office. So, while her budget might be a hard pill to swallow, it is ultimately something Michigan will have to choke down.
Let's take a look at the tax and fee increases the governor is proposing.
First and foremost, there is the two percent excise tax on around 110 services in the private sector. The tax is surprisingly broad-based: you'll pay a little extra on everything from auto repair, to haircuts, to movie tickets.
For two cents on the dollar, the state will replace $1.1 billion in revenue from the expiration of the Single Business Tax, which is set to expire at the end of 2007. It is the primary component of Granholm's budget plan, and it is drawing the strongest reaction.
Another part of the governor's strategy includes increasing the fees for just about everything. Considering how big of a role hunting plays in Mid-Michigan, it is interesting to note some of the larger increases, which include a $15 to $30 hike in resident deer hunting licenses and a $28 to $40 hike in resident fishing licenses.
Granholm's budget estimates that the total increase in revenue from the fish and game licenses will be around $16.9 million. Overall, fee increases will likely make up around $115 million in revenue.
The question is, then, will you pay it? Is a deer hunting license actually worth twice the amount it currently costs?
Granholm thinks so, though she should beware of the potential negative reaction from the public. The newspapers have been relatively kind up to this point, although this trend could reverse itself at a moment's notice if something hurts more than it's supposed to.
So while we support Granholm's bold solutions, we must advise moderation, unless you really want to pay over $10 for a ticket to see Adam Sandler's latest bomb.