New Tax on Services to Fund Education

Governor Granholm is proposing a sales tax on services. Michigan tried that once and it was a disaster because the law was sloppily written and filled with unintended consequences. So this time she is proposing a different version. Republicans say no to the tax at this time. Democratic House Speaker says he wants to get the budget done before he discusses new revenue. I guess that means lots of cuts to balance the budget and then we come back and restore funding if we get new taxes. Huh? Sure is confusing. I guess that means that everyone wants to get through the election before discussing budget reform, tax/revenue reform and Michigan's future. This is another example of the State leadership not being able to work together, even on a crisis the size of the one facing Michigan. Depressing.

Here is an article on the topic that appeared in Detroit News:

Granholm: Sales tax on services needed to bolster education

Mark Hornbeck / Detroit News Lansing Bureau

Lansing -- Gov. Jennifer Granholm defended her proposal to extend the sales tax to services on a cable TV news show this morning, saying Michigan "has to invest in education" to convert from a manufacturing to a knowledge-based economy.

The governor said on MSNBC that Michigan has "a big, hairy audacious goal of doubling our number of college graduates." In order to do that, she said the state has to stop cutting education spending, which it did this year by $165 per student.

Since public school aid is funded primarily with sales taxes, the state needs to update and stabilize its sales levy by expanding it to include most services, Granholm said. In the past century, about 60 percent of consumer purchases were made on goods and today about two-thirds is spent on services, she said.