ay October 1 the state legislature agreed to a budget deal that will raise the Michigan state income tax and expand the state sales tax to include a vast array of services not formerly taxed. The income tax rate was raised from 3.9 to 4.35%. All this to avoid the dreaded government shutdown. What is so terrible about a shutdown anyway? The casinos are staying open. Has everyone forgotten that the most terrifying words in the English language are "I'm from the government and I'm here to help you"? Bring on the shutdown.The victims of the increase are, as usual, the working class who take the hit on the income tax. But more troubling is the expansion of the sales tax to certain services. Lansing's political class has now deputized a whole new crop of revenue collectors. But the vast majority of the providers of these services are also the least able financially comply with yet another level of government paperwork in connection with their businesses. Remember, very few of these new tax targets currently collect or remit sales taxes to the state. They have to start tax collecting from scratch--and soon. Very few private investigators or singing telegram deliverers also have a gift shop in the lobby that makes them worry about collecting sales taxes. I wish I were an accountant right now.
The list of services that will now be taxed include:
- Tanning salons
- Escort services
- Massages
- Administrative services (such as payroll)
- Investment advising
- Janitorial
- Armored cars
- Private investigators
- Packaging and labeling
- Commercial landscaping
- Skiing
- Business service centers
- Carpet and upholstery cleaning
- Courier services
- Document preparation
- Self-storage
- Transit
- Ground passenger services
- Travel agents
- Scenic transportation
- Service contracts
- Interior design
- Warehousing
- Storage
- Baby shoe bronzing,
- Balloon-o-gram services
- Palm reading
- Pay phones
- Singing telegrams
- Psychics
- Phrenology services
- Personal trainers
- House sitting
- Shoeshine services
On the bright side, these services will not be subject to the expansion of the sales tax:
- Cable or satellite television
- Sports and concert tickets
- Vehicle repair
- Golf greens fees
- Marina fees
- Movies
- Legal fees
- Accounting fees
- Haircuts
If there is any justice, the afflicted professions will get together and sue to repeal the tax. I don't know that it will pass constitutional muster. What is the rationale for taxing phrenologists but not accountants or lawyers? And what did palm readers ever do to anyone? I would be willing to be bet that doctors kill way more people every year than palm readers or paid escorts.
You would think that a full-time legislature could come up with a better solution this. On the other hand, maybe they've got their eyes on the real prize. Maybe we aren't getting the big picture here. This massive tax hike bumps Michigan up to number 11 in the list of states with the highest tax burden (up from 14th). Obviously having the highest unemployment rate in the nation is not enough for these ambitious politicians. Being the most highly taxed state.
On the bright side, I doubt the taxes on these services will generate the revenue the political class in Lansing think it will. Cash is certainly king in the escort and massage business, after all. Maybe I'll get my government shut down when all is said and done. The small business people in the state could use the break.
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