Months of economic research to determine the tax rate necessary to fund state government has been completed by top Michigan economists, ballot petition language has been approved by the Board of Canvassers and the circulation of petitions to place the Michigan FairTax proposal on November's ballot has begun.
If the proposal is passed by the people in November, the MI FairTax will go into effect Jan. 1, 2010, and Michigan citizens and businesses will no longer have to contend with:
-- Personal income tax
-- Michigan Business Tax and current Insurance Proceeds Tax
-- Property tax on business equipment
-- State six-mill Education Tax on business real estate
-- Sales tax on business purchases
Michigan citizens will keep 4.35 cents per dollar of their income and pay 3.75 cents more in sales tax as the rate is raised to 9.75 percent. There will be no more Michigan income tax returns and everyone will know exactly what they are paying in taxes as it will be shown on every retail sales receipt.
The poor are protected and the tax is made graduated by a monthly "prebate" that "untaxes" expenditures up to the poverty level for all households by payments in the amount of what the sales tax would be and reduces the effective tax rate of all Michigan residents.
While everyone pays the same tax rate of 9.75 percent at the cash register, the "prebate" results in an effective tax rate that increases as spending increases. Because of the prebate, a family of four spending $21,200 per year will have a 0 percent effective rate, and if the family spent $48,451 (median Michigan household income), it will have a 5.5 percent effective tax rate. There are no loopholes and the need for them is eliminated because the prebate untaxes necessities.
The MI FairTax will bring "Truth in Taxation and Job Creation" to Michigan. Taxing businesses is a deceptive way of taxing citizens. The MI FairTax stops the deception of hiding Michigan "business" taxes in prices of Michigan-produced products that today inflates costs and results in the exportation of our companies and jobs rather than our products.
By eliminating the ruse of "business" taxes, people will see on every sales receipt their true tax burden for the first time in generations. This visibility of taxes is the self-limiting factor on taxation and government intended by our Founding Fathers.
Most economists agree that income taxes depress the economy and sales taxes grow the economy. It's not rocket science. When you tax productive behavior you get less of it.
The MI FairTax is so simple that some fear the public will understand it. It is so visible that some fear the public will learn their true tax burden. It taxes us so directly that it eliminates the ability to buy and sell tax favors, so some that benefit from this practice hate it.
The economic research, effective tax rate charts, constitutional language, how to obtain petitions, etc. can be viewed at: www.mifairtax.org.
About the author: Roger W. Buchholtz, director of the Michigan FairTax Association, is owner and operator of a property development and property management company in Detroit and co-owner and president of an international trading company. He has been active in local, state and national politics and has served in local elected office. He is the volunteer director of the 20,000-member Michigan FairTax Association. He was a captain in the U.S. Army.
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