Investigative
2:35 pm
Fri January 21, 2011

State of Michigan giving more in tax breaks than it collects

I was sifting through the many reports by Gongwer News Service.  Gongwer covers just about everything that happens in and around the Lansing capitol complex.  What caught my eye was an article entitled "State Estimates Tax Expenditures of $33.8 Billion for FY'11." 

I read through the Gongwer story which linked to a 111-page report by the Michigan Department of Treasury.

It shows how tax credits, deductions, and exemptions add up to about $34-billion in lost revenue to the state this year.  State taxes bring in a little more than $18-billion.   There’s more in tax breaks than collected in taxes.

So why doesn’t the state just eliminate some of those $34-billion in tax breaks to fix its $2-billion budget hole?

I called up John Lindstrom. He is the Publisher for Gongwer News Service in Michigan.  He's been covering this kind of stuff forever. 

He says that idea of killing some tax breaks has been argued.

“Of course the counter-argument is that if you eliminate those credits or you eliminate those deductions that in effect you have a real tax increase on at least some people who are now benefitting,” Lindstrom said.

The report shows the single largest tax break is the exemption of sales taxes on services. That amounts to more than $14-billion.    

We'll get a better idea of what the state is going to do about its $2-billion budget hole the middle of next month.  That's when Governor Rick Snyder will present his budget.