Tax Reform and Revenue Options
Position Point #7: State Revenues
The funding problems of Michigan's public schools have been only partially caused by the downturn in the economy. A preoccupation with cutting taxes with little or no regard for how to sustain critical governmental function is also to blame. The domestic economy has changed to one that is more service based. The Practitioners Summit believes that the state should extend the 6% sales tax to all services with a possible reduction in the sales tax rate. An aggressive program to capture sales tax on internet sales in tandem with out-of-state vendor reporting requirements is recommended. We also believe in the establishment of a graduated income tax, reducing or eliminating the Michigan Business Tax (MBT), closing loopholes, and reducing tax preferences for retirement income. Other areas to be considered include reexamining the current 6 mill state education tax as well as assigning collection of the current 18 mill non-homestead school local levy to the state for efficiency in collection. Whatever change is made, it must have an effective life of at least 10 years to assure that public schools are able to operate under a fiscally sound foundation based on reliable and stable revenue sources. Additional funding in combination with other school operational reforms cited in this position paper will be critically necessary if the Michigan educational system is to be sustained beyond the current year.
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