TAX TOPICS

Welcome to MichiganTaxTruth.com
Providing citizens, policymakers, elected officals, and the media with accurate and true information about state government taxes and spending in Michigan

Myth-Busting the State of Michigan Budget


Updated Dec 07
What you don't know CAN HURT YOU
10 Facts Michigan Citizens Need to Know About Michigan's Fiscal Crisis

Presenting Accurate Information about
State Taxes & Spending
Michigan Tax Truth is a repository of information about state government taxes and spending. The site, presented by the Michigan Fiscal Responsibility Project, is updated frequently. Here you will find:

• Scholarly research reports and studies from leading economists, tax and fiscal experts, and others.
• Information about how Michigan’s changing economy is affecting tax revenues for state-funded programs and services.
• News stories, editorials and other commentaries about state taxes and the programs and services they fund in Michigan.
• Information about Michigan tax laws and tax policies that affect state-funded programs and services.

In the Future, What Kind of Michigan Do We Want?
Michigan's quality of life is at issue. State taxes paid by Michigan families and businesses fund quality of life services that benefit our families, businesses and communities every second of every day. As a result, Michigan citizens and businesses deserve accurate and true information about the taxes they pay to fund:

• Michigan's public schools.
• Michigan's 15 public universities and 28 community colleges.
• Police protection and fire fighters in all Michigan cities, townships, villages and counties.
• Water, sewer, sidewalks and other infrastructure systems in our communities.
• Health care for more than 1.5 million Michigan children, elderly and disabled citizens.
• The operations of all state prisons.
• Maintenance and construction of Michigan’s roads and bridges.
• And more.

Why Michigan Tax Truth?

It’s trivial to say, but true in ways that are ridiculously profound and not understood by the public and even most policymakers: Michigan is at a crossroads. In fact, we are at several crossroads.

Economic Transformation: Settling for Low Paying Jobs or Retooling for a Better Future
Michigan’s economy is undergoing a fundamental realignment. The manufacturers that generated and supported jobs that formed a rock-solid Michigan tax base in the 20th Century are being transformed. Productivity increases and foreign competition are resulting in the loss of hundreds of thousands of high-paying, low-skilled manufacturing jobs in Michigan. The state is faced with remaking itself: Michigan must replace these old-line manufacturing jobs with other high-paying positions, or see a dramatic reduction in the lifestyle of all residents.

The loss of these jobs has been a factor in the loss of state tax revenues. The state’s tax laws and policies are still tied primarily to a manufacturing economy now in decline. Meanwhile, increasing unemployment has increased the demand for critical state government services, particularly health care for the state’s skyrocketing Medicaid population.

Tax Cuts Reduce State Tax Revenues
During the same years that Michigan has been losing hundreds of thousands of manufacturing jobs, state elected leaders have approved a litany of tax cuts that have further reduced revenues for state government programs and services. Year after year for more than a decade now, tax cuts have been the dominant economic policy of the Michigan Legislature, generally supported by lawmakers on the political right and left. Without question, the tax cuts, combined simultaneously with Michigan’s massive job losses, have resulted in staggering funding cuts to health care, public universities, police and fire and other local government services since the late 1990s. Business tax rates in Michigan have been cut by 15 percent; personal income tax rates have been cut by 20 percent. Yet today, after dozens of tax cuts and massive job losses, Michigan nearly leads the nation in unemployment and is facing its worst state budget crisis since World War II.

The Economic Crossroad
Michigan’s first crossroad is economic: In the future, what will the high-paying jobs be in our state? What can Michigan do to create the types of jobs that will sustain and generate adequate revenues to support Michigan’s quality of life programs and services, such as health care, K-12 and higher education, public safety, and transportation?

The Political & Social Crossroad
The second crossroad is political — and it carries dramatic social consequences: Political decisions about taxes made in the next few years will help answer the following questions:

• In the future, will Michigan continue to be a state that funds health care for the poor?
• Will higher education in Michigan become accessible only to the relatively wealthy?
• Will our neighborhood public schools be safe and offer good K-12 educations?
• Will a police officer show up at our home or business if it’s being robbed?
• Will a fire fighter show up if our house is on fire?
• Will we continue to keep violent felons locked up in our prisons?
• Will we continue to have safe drinking water and protect Michigan’s abundant natural resources?
• Bottom line: Will the Michigan of the future continue to fund the programs and services that provided health care, public safety, education, transportation services and more to the Michigan of the past?

Michigan tax laws and policies must be examined in the context of the state’s changing economy. Equally important, Michigan tax laws and policies must be examined in the context of the quality of life services we, as citizens, want state government to provide to our families, businesses and communities.

It is our hope that Michigan Tax Truth will make you more informed about how state taxes affect your family, business and community, and about how changes to the tax structure will define the future quality of life for all of Michigan.