We need a system under which tax incentives are not necessary, and a tax system under which loopholes are non-existent. We have tried the income tax and business tax systems, but they are riddled with loopholes, and those who are at the lower end of the scale usually end up paying more of the cost. We have tried incentivizing businesses; that helped put us into the financial hole in which we now find ourselves, because A) the government provided more tax abatements than it was receiving in revenues, and B) too many companies took advantage of the abatements as short-term profit grabs, and then split without ever producing the promised long-term jobs. The idea of relying on income taxes when individual income is down means that revenues are down as well, so that idea makes no sense, and with IRS non-compliance figures estimating that Michigan is losing as much as $2.2 billion each year because of illegals, we need a system that somehow taps into their earnings - something an income tax fails to do. In short, the system under which we have been operating for generations - under administrations of BOTH parties - has failed miserably.
It is time to switch to a broad-based consumption tax with no loopholes to which everyone contributes regardless of legal status or source of income.
The Michigan FairTax would:
* Let us keep our entire paychecks by eliminating tax withholding.
* Replace Michigan’s current complex and unfair tax system with a simple, no loophole, retail sales tax on all new goods and services with an effective tax rate of 0 - 9.75%.
* Make taxation visible to the consumer.
* Provide a more stable revenue source and raise the same amount of money for Michigan government.
* Eliminate tax on necessities via a “prebate”.
* Require public approval for increases.
* Eliminate current sales tax, Personal Income tax, Michigan Business Tax, Personal Property Tax, 6 mill State Education Tax on business and sales tax on all business purchases.
* Make Michigan products more competitive with out-of-state/foreign products and return jobs here by lowering the cost of doing business in Michigan.
What would be taxed?
* All new consumer goods and services, at the time of sale.
* All new titled goods (homes, vehicles, boats, trailers)
What would NOT be taxed?
* Business to Business Transactions
* Most used goods, including vehicles (Tax paid at the time of sale when item was new. Sales tax on homes, new or used, is paid at closing)
* Tuition
* Insurance Premiums
* Savings, Investments
* Charitable Giving Taxes paid to federal/local governmental units
* Loan, Car and Mortgage Payments (Tax is paid at the time of sale when item is new, or at closing of homes - new or used)(Information taken from Michigan FairTax, a brochure produced by the Michigan FairTax Association)
There is no tracking of income, no worrying about indexing a standard deduction to factor in the cost of living, inflation, or anything else. You buy it, you pay tax on it. It's that simple. The more you buy above the federal poverty level, the more taxes you will pay. The FairTax taps into both illegally obtained income as well as that of illegals because everyone has to make purchases. It is that simple. With an income tax, if you don't track it and declare it, you can't tax it. And by including the prebate, a monthly tax return sent out in advance of the month, we also insure that those below the poverty level pay no taxes on any necessity.
So, again, there is nothing to track, nothing to adjust, you know exactly how much tax you are paying for a given item (no tax pyramiding - hidden taxes). You keep your entire paycheck, your employer doesn't incur the costs associated with tracking and reporting your income. With no taxes on business to business transactions, we can get rid of tax abatements and still attract new business -- including the movie industry. Analysis of this system shows that it will at least be revenue-neutral, and in all likelihood will increase revenue -- in addition to making Michigan the premier location in which to locate a business.
It is time to make the switch. Slash and burn doesn't work; this does. Our state's future depends on it. You can use the links in the right column to find your Michigan legislators and let them know that you support the FairTax -- and so should they!
PS -- The same concept will work at the national level, as well!
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