Michigan Tax Hikes Coming?
Getty Images By: Jamie McDonald
Well, our elected officials here in Michigan have decided not to leave it up to us Michigan voters concerning whether we want to pay for our increased road cost with higher taxes.
You will be asked to vote next May to approve increasing the sales tax from 6 percent to 7 percent (Note: That is a 16.6 percent increase in the sales tax) to raise $1.2 billion a year to fix Michigan's decaying roads and bridges, under a deal by Michigan Gov. Rick Snyder and legislative leaders from both parties.
First the House and the Senate will need to vote on the deal, in order to create the ballot issue for a May 2015 vote. The vote will require a two-thirds vote in each chamber of the Legislature to add it to the May ballot.
The deal calls for the following:
■ A statewide ballot proposal would be put before voters in May that would raise the general sales and use taxes from 6 percent to 7 percent, raising $1.34 billion a year. It would eliminate the 6 percent sales tax on fuel, losing $752 million a year.
■ Implementing a wholesale tax on motor fuels starting next Oct. 1, generating $1.2 billion.
■ Increases in registration fees: $45 million in revenues from vehicle owners and $50 million from heavy trucks. The change will not result in an increase in vehicle registration fees, rather, it will end the 10 percent rollback that new car owners now get for three years after buying a new car.
■ Transportation-related reforms: require warranties and improved competitive bidding on road projects.
■ The resulting revenues would be split between: $1.2 billion for roads; $112 million for transit and rail; $300 million to schools; $94 million to local units of government; $260 million toward fully restoring the Earned Income Tax Credit for low-wage workers. Note: This totals to nearly $1.2 billion in extra spending
Let us look at the numbers from the bullets above
$1,340,000,000 – $752,000,000 + $1,200,000,000 + $45,000,000 + $50,000,000 = a total increase of taxes totaling $1,833,000,000
$1,966,000,000 extra spending with $1,833,000,000 increased taxes total 133,000,000 in deficit spending