Governor Surrenders on Service Tax

Michigan taxpayers can breathe a sigh of relief: The Detroit Free Press reports that Gov. Jennifer Granholm has abandoned hope that her service tax will become law. At a news conference on an unrelated issue, the Governor stated that she did not expect the Legislature to enact her plan.

That's a good thing for the state economy, since her proposal would have resulted in the loss of 30,000 jobs in 2011, according to a study by Mackinac Center analysts.

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In addition, there is no compelling need for more increased tax revenue. There are many ways to save money in the state budget, and Michigan's state government revenues have declined much less proportionately than the overall state economy.

The Governor still defended her proposal. "I think tax restructuring... is really important for the future of our state," the governor told the Free Press. However, she added, "I understand there is no desire in the Legislature to talk about anything with the word tax in it."

Tax hikes are a bad word for many reasons, some of which are suggested above. The budget has still not been finalized, and that means that a tax hike is still an option. But it seems that Lansing got the message — for now.