LANSING – Michigan’s tax system is not keeping up with program need, the Michigan League for Public Policy said in calling for changes as part of upcoming budget negotiations.
In addition to ensuring there is enough money to pay for needed programs, the League called for changes that would shift the tax burden away from lower-income families.
An analysis released Monday by the League, Losing Ground: A Case for Meaningful Tax Reform in Michigan, found that general fund revenues, adjusted for inflation, are 15.5 percent less than in 1968.
But that revenue burden has also been shifted to families from business, the report said, with the new corporate income tax meaning a $1.6 billion cut to business taxes and a $1.4 billion increase to personal taxes.
The League called for return of the Earned Income Tax Credit to 20 percent of the federal credit from the current 6 percent, while restructuring business taxes to recover the $550 million cut for fiscal year 2011-12.
The group also wants the sales and use taxes expanded to cover most services as well as sales made over the Internet.
Spending cuts, the report said, should look at credits and deductions as well as booked expenditures to be sure state spending concentrates on priorities such as education, health care and basic income.
“When we look at our budget and tax system, are we really asking all the right questions?” Gilda Jacobs, president and CEO of the Michigan League for Public Policy, said. “We should be asking: Does our revenue system keep up with the times? Is it fair? Is it adequate? Does it improve our education levels and at least keep our quality of life from eroding?”
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