A Tax by Any Other Name

Click for audio A Tax by Any Other Name

To paraphrase Shakespeare, a rose by any other name is still a rose. In December 1998, the Michigan Supreme Court agreed that a tax is still a tax, even when some municipalities choose to call it something else.

The issue before the court was a 1995 Lansing ordinance that levied a so-called "user fee" on all property owners to help pay for a new $176 million storm water sewer system.

The problem was that the city did not first ask for the voters’ approval—as required by the Michigan constitution—before imposing the hefty new surcharge. Residents soon dubbed the surcharge the "rain tax," and one citizen challenged its legality in court.

The city maintained that the surcharge was a user fee and that citizens were not entitled to vote on user fees. But the court ruled that the "rain tax" did need to be put to a vote, explaining that user fees are voluntary payments in exchange for services, and there was nothing voluntary about the Lansing "rain tax."


The Michigan Supreme Court’s decision upholding the state constitution sends a powerful message to municipalities throughout the state: Disingenuous word games are no substitute for honest and accountable government.


For the Mackinac Center, this is Catherine Martin.