Wednesday, May 30, 2007

Michigan Speaker: We might move to replace flat tax with a progressive tax

Good news out of Michigan that might inspire our elected officials here: the Speaker of the Michigan House is pushing for a constitutional amendment to replace that state's flat income tax (currently set at 3.9%) with a graduated or progressive income tax where higher incomes are taxed at a higher rate and lower incomes are taxed at a lower rate.

This
article in the Livingston Press and Argus explains the dynamic:

Top House Democrats also made clear that they want to go to Michigan voters in November 2008 to ask for a constitutional change to dump the state's flat-rate personal income tax, now at 3.9%, in favor of a graduated income tax with higher rates for taxpayers who earn more.

House Speaker Andy Dillon, D-Redford Township, said he and Senate Republicans were negotiating to raise the personal income tax, expand the state's sales tax to include entertainment, such as tickets to concerts and games, or combine both tax options.

Dillon gave 50-50 odds that the House would vote on the tax increase this week, as he and fellow Democrats continued to woo Republicans, partly by showing a willingness to support new laws designed to rein in government costs.

[snip]

Dillon said a graduated income tax should give lower-income taxpayers a tax cut. "It's progressive. Those who have the means can pay," he said.

Michigan's constitution prohibits a graduated tax, and voters have rejected attempts to adopt one several times. Putting it on the ballot requires a two-thirds vote of the House and Senate. Most states have a graduated tax.

Senate Republicans would consider a graduated tax only if a solution to the current budget deficit could be found without a tax increase, said Matt Marsden, spokesman for Senate Majority Leader Mike Bishop, R-Rochester.

We should put on the November 2008 ballot a constitutional amendment that asks the voters whether we should continue to outlaw a progressive income tax.

Bills to do so are HJRCA 23 (Will Davis and Barbara Flynn Currie) and SJRCA 7 (Martin Sandoval and Michael Frerichs).

Thanks to the Citizens for Tax Justice newsletter for the tip on Michigan.

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