Mises Wire

Home | Wire | The Michigan State Government's 24-Hour ATM

The Michigan State Government's 24-Hour ATM

Tags Taxes and Spending


The Michigan government has secured a new, 24-hour ATM machine: the taxpayers. A Michigan government shutdown was averted in the middle of the night when the bozos in the legislature decided to pass a 6% service tax. Governor Granholm says she will "consider a repeal only if other new tax revenue is found to avoid cuts to education, public safety, and health care." Where have we heard that before? Government can't ever eliminate a tax until it replaces it with a new tax - hence, shift the tax onto a different group of people that won't complain as loudly. The rationale for this tax is that it provides badly need revenues to cover a budget shortfall of almost $2B, and the government is trying to capitalize on the fact that Michigan will become a service/information-based economy as the auto industry wanes and moves elsewhere. This service tax, which goes into effect Dec 1st, wil be the final nail in the coffin of a state that is already in a state of rigor mortis.

Already, there is tremendous confusion as to what services will or will not be taxed. It's funny to note how lobbying efforts have influenced what services are excluded under this new law.

* Real estate will not be taxed thanks to the massive real estate lobby in Michigan.
* Travel tourism will be taxed, further eroding Michigan's once-booming tourism industry.
* Dating and weight-reduction services will be taxed
* Skiing is taxed, golf is not. Michigan is one of the country's greatest golf havens. Likely, considering the demographics and available resources, the legislators all golf at Michigan's premier golf courses, but they go out-of-state to ski.

Other services that will be taxed are balloon-o-grams; fortune telling, palm reading, and astrology; house-sitting; personal fitness training; shoe shines; singing telegrams; baby shoe bronzing; and tattoos. The list goes on forever. "Consulting" services - which will be almost impossible to define - are expected to produce about 70% of the revenues booty. Former Detroit News columnist George Weeks said, "In decades of following how Lansing deals with financial crisis, I have never seen enactment of such a bizarre, crazy quilt, irrational, inexplicable, unfair and — most of all, confusing to taxpayers — tax. A fix is needed to fix the budget fix."

The government is estimating it can steal between $600M - $800M each year over the next two fiscal years. The 6% tax is earmarked with 2% going for school aid (of course, more money means more geniuses graduating from public schools), and the other 4% goes to the 24-hour ATM (the general fund).


Contact Karen De Coster

Karen DeCoster, CPA, has an MA in economics and works in the healthcare industry. She has written for an assortment of publications and organizations, including LewRockwell.comMackinac Center for Public PolicyTaki's MagazineEuro Pacific Capital, and the Claire Boothe Luce Policy Institute. Her website is KarenDeCoster.com.

Shield icon wire