Politics & Government
8:29 am
Fri October 5, 2012

Commentary: Proposal 5 and Michigan's taxes

Nobody likes taxes, and for the last 30 years, we’ve been happily brainwashed into thinking that our taxes are too high.

And, as a result, a leading economist told me the other day, “We have some of the worst roads in the country.” But hold on. If a lot of people are fooled into voting yes on Proposal Five, our roads and everything else are certain to get worse. In fact, much worse.

That’s the conclusion of Michigan State University Economics Professor Charles Ballard, perhaps the top expert on our state’s economy. His short, excellent book Michigan’s Economic Future ought to be required reading for anybody who wants to understand how things work.  Believe it or not, there are a few hard facts you need to know about taxes. First of all, we are already paying far less than we once were. Ballard told me, “State and local tax revenues in Michigan are already a much smaller fraction of our economy than they were a few decades ago.”

How much money is that?

A lot.

The decrease is equivalent to eight billion dollars a year. That is a large part of the reason why the roads are so bad and why we have slashed higher education spending just when our kids need it more than ever.

We’ve been on a prescription to disaster. And now, there’s a proposal on the ballot that would shove us over the cliff. Proposal Five would require a statewide vote of the people, or an almost impossible to achieve two-thirds of the legislature, to increase any taxes or even to expand the tax base.

This proposal is on the ballot because Matty Moroun, the monopoly owner of the Ambassador Bridge, shelled out millions of dollars to pay to put it there.

This is not a conservative proposal. This is an extremely radical proposal that would effectively cripple representative government. It would put all power in the hands of a one-third minority who would then have the ability to prevent even large majorities from responding to crises or investing in the future.

Governor Rick Snyder is strongly against this proposal. So is the Michigan Chamber of Commerce and the staunchly Republican Detroit News. But polls show most voters think it is a great idea. It is anything but. Ironically, even if this doesn’t pass, the state is still going to be more and more starved for revenue. That’s because, Ballard says our antiquated tax system generates less and less money over time. The sales tax, for example, doesn’t apply to most services and entertainment. Yet these sectors of the economy have been growing, even as manufacturing shrinks.

What we need is not tax limitation, but tax overhaul, a fairer system designed to make sure that state and local governments have the money they need to provide what we need from them.

“These days, lots of folks spew anti-government rhetoric,” Ballard noted. But what do governments really do?

“They pave our roads, make sure our drinking water is safe and educate our children.” For some strange reason, I don’t want to give those things up. And if that means raising taxes, well, as old Patrick Henry once said, “if this be treason, let’s make the most of it.”

Jack Lessenberry is Michigan Radio’s political analyst. Views expressed in the essays by Lessenberry are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.