Taxes — We’re No. 30 and 39

Picture of Karen Holcomb-Merrill

Karen Holcomb-Merrill

A recent report by the Senate Fiscal Agency confirms what some have been saying for a while, but may surprise others — Michigan’s tax burden fell significantly between 1999 and 2009. In 1999, Michigan had the 16th highest state and local tax burden. By 2009, it had fallen to 30th.   

There are some who continue to argue that Michigan is a high tax state and that taxes should be reduced. Well, the facts seem to indicate otherwise, especially when it comes to taxes paid by businesses in our state.

According to the report, Michigan’s corporate tax burden fell from 12th in 1989 to 39th in 2007.  This was the largest drop in tax burden among all of the states.  These numbers make Michigan look like a pretty low-tax state for those doing business here.

Michigan taxpayers are paying a slightly higher percentage of their income toward the state education tax, but less toward the income, sales and use taxes. But however you look at it, their tax burden has fallen significantly overall.

Understanding tax burden is important as debate continues about how to address the short-term $1.8 billion budget gap for the 2011 budget and the long-term budget deficit.  There are those who refuse to consider any change to the outdated tax structure in our state, often citing that taxes are already too high.  Perhaps after considering the facts they will reconsider their position. 

The League and A Better Michigan Future  see the new fiscal agency report as further evidence that the time is right to modernize the tax system. Extending the sales tax to most services and instituting a graduated income tax will generate more revenue for the state and will help the state keep pace with the changing economy.  That’s a win-win.

— Karen Holcomb-Merrill

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3 Responses to Taxes — We’re No. 30 and 39

  1. Rick Haglund says:

    Karen,

    The Michigan Business Tax and the 22 percent surcharge on the tax kicked in during the period after the Senate Fiscal Agency report. Any idea how business tax burden was affected?

    • Karen Holcomb-Merrill says:

      Rick-I have not seen any more recent numbers than the ones contained in the SFA report.

  2. Luanne Beaudry says:

    Thank you for sharing this important information. I don’t think may people realize this about our state. Remember the better days, folks? Well, that was when we paid more in taxes. Consequently, we must raise revenues by: changing our outdated tax structure to a graduated income tax, taxing certain services (other states already do this), and closing irresponsible tax loopholes, to name a few!

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