Michigan's political class needs to protect the perks and privileges of government and school employees in the face of revenue shortfalls, so they're pushing for tax hikes, a.k.a. "new revenue," that will take more from you, me, and the man behind the tree. 

Among the proposals are these bills to levy sales, use and Michigan Business Tax on 20 percent of the bad debts suffered by merchants.

This is one of those so-called tax "loopholes" that are actually the product of laborious give-and-take over many years regarding the unforeseen consequences of various tax laws. In this case, it's considered uncouth to kick merchants when they're down by requiring them to fork over sales tax on merchandise they never got paid for because they were stiffed on a credit sale by a deadbeat customer.

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OK, probably a case can be made that the logic and principle of the sales tax law, the economic "incidence" of this tax, and other considerations all lead to a conclusion that the tax should be paid on these bad debts, period.

However, these bills don't make that case. By only going after 20 percent they implicitly accept the previous conclusions that doing so is unfair, and send the following message:

"Never mind all that principle and equity stuff, and all those prior give-and-takes on this issue. We need the money, we have the power, you don't, too bad, now fork over!"

 

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