by Doug Paterson, MPA, Director of State Policy, MPCA
On February 2, a coalition of organizations called “A Better Michigan Future”, of which the Michigan Primary Care Association is a member, held a press conference to kick off a public information and legislative advocacy campaign that calls on policymakers to address the state’s structural deficit. They defined a structural deficit as one created by tax policies that cannot, DESPITE WHETHER THE ECONOMY IS GOOD OR BAD, keep up with inflation. It is because of outdated tax policy, NOT THE ECONOMY, that the state legislature faces budget deficits year after year.
The group pointed out the three main sources of tax revenue in our state are income tax, sales tax, and property tax. In all three cases, Michigan’s tax policy results in revenues that can only decrease. Property tax increases are limited by proposal A that was passed in the 1990s. Sales tax is tied to goods rather than services, while goods are a declining portion of our economy and also are affected by the growing volume of sales conducted via the Internet, through which little state sales tax is collected. The flat income tax does not allow the state to benefit from income from the part of our population where income is growing, the top 5%, because there is no policy for taxing discretionary income at a higher rate than other income. That is something that a graduated income tax would resolve. The group also pointed out that Michigan is well behind other states in all three areas.
In addition, the coalition is calling for a review of all tax exemptions that have been legislated over the past 30 years but not reviewed to determine any benefit that the state has received from them.
Finally, the group called for an audit of all current state contracts to measure value and benefit to the state and called for a policy that prohibits “no bid” contracts in the future.