The Tax Man Cometh To GR

February 15, 2008
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GRAND RAPIDS — He may very well be the biggest proponent for changing the state’s tax system, and it looks like he will be talking about his tax plan at the next meeting of the Grand Valley Metro Council.

GVMC Executive Director Don Stypula said he has invited state Rep. Fulton Sheen, R-Plainwell, to attend the council’s March 6 meeting to talk about the “Fair Tax” and answer questions council members might have about it.

The concept Sheen backs would add a 9.75 percent sales tax to goods and services sold, except for business-to-business transactions. At the same time, the Fair Tax would eliminate the state income tax, the current 6 percent sales tax, the personal property tax businesses pay on equipment purchases, the state education tax businesses pay, and the Michigan Business Tax. Sheen said each household would get a tax rebate every year under the plan.

A statewide petition drive to get the Fair Tax before voters in the November election began two weeks ago, an effort that needs to collect 380,125 valid signatures by July to get on the ballot. Sheen said there are 1,000 volunteers working on the drive now, and last year he said about 30 lawmakers supported the new tax plan.

“It will likely be next month,” said Stypula of when Sheen would appear before the council. “There will be some opposition to it.”

The Michigan Chamber of Commerce is skeptical about the rebate plan affiliated with the new tax plan and concerned that taxpayers will be burdened even more by the extra sales tax that will be transferred to them. The Michigan League for Human Services sees the tax as highly regressive for the poor and senior citizens.

Michigan Fair Tax, a nonprofit organization, estimated that Fair Tax would produce about $20 billion a year in state revenue and cover the amount raised by the taxes it would abolish. Roger Buchholtz, the organization’s director, said ending the personal property tax and the state education tax would save state businesses about $2.4 billion a year, and also draw more businesses to Michigan.

“A Michigan Fair Tax will cause us to be the most attractive state in the Union in which to do business,” he said.

Of keen interest to council members is that the Fair Tax would guarantee constitutional and statutory revenue sharing to counties, cities, townships and villages. Current statutory sharing is not guaranteed, as counties statewide were removed from the receiving list four years ago. The state began to lessen revenue-sharing payments to cities and townships five years ago. The city of Grand Rapids has said it has lost at least $30 million in revenue-sharing receipts over those years.

The council has 35 members and all are concerned that revenue sharing payments be restored to the shares the formula dictates. The funds for a unit’s revenue sharing come from the sales taxes that are collected within a given area. A portion of what is collected is supposed to be distributed to governments within that area.

Sheen recently announced that he supports former Republican Arkansas Gov. Mike Huckabee for president. Huckabee wants to get rid of the Internal Revenue Service and install a national sales tax as a replacement for the federal income tax.

Sheen introduced the Fair Tax proposal in May and noted that Michigan residents would make nearly all their purchases with pre-tax dollars, if voters approve the plan.

“Under the Fair Tax proposal, the state sales tax would increase by 3.5 percent, but residents would keep approximately 4 cents more on every dollar they earn, which is currently taken directly from their paychecks and sent to the state,” he said.

“People will only pay tax on what they purchase, and those with higher incomes who buy more things will pay more tax. People who don’t will pay less tax.”

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