Feb 13, 2008

Petition drive to eliminate state income tax in favor of an increased sales tax kicks off

LANSING -- Saying Michigan was broken, state Rep. Fulton Sheen, R-Plainwell, held press conferences across the state to kickoff the petition drive to place an amendment to the state constitution on the November ballot that will allow implementation of the Michigan Fair Tax Proposal.

The Fair Tax Proposal would completely eliminate the recently enacted Michigan Business Tax (MBT), personal property tax, the 6-mill business education tax and the Michigan Income Tax in favor of a 9.75 percent sales tax on goods, food and services purchased in Michigan. That's a 3.75 percent increase from the current 6 percent sales tax. Business-to-business transactions would be exempt.

"Michigan is broken," Sheen said. "At this point in time we have a 7.6 percent unemployment rate while the nation is at just 4.6 percent. The entire national economy is headed for trouble, and that will have even more of a negative effect on Michigan."

The Houston-based Americans For Fair Taxation (AFFT), formed in 1995, is helping finance the ballot initiative with an eye on making the system national. But Sheen is pushing the Michigan Fair Tax Proposal Committee. AFFT has close ties with Republican Presidential candidate Mike Huckabee. The former Arkansas governor is a big promoter of the tax plan, and the group has a large presence at his events, handing out literature and other activities. AFFT's former Chief Operating Officer recently left AFFT to work on the Huckabee campaign.

The committee held press conferences in Lansing, Pontiac, Flint and Grand Rapids Tuesday, and the committee has to collect the signatures of 381,000 registered voters before the 90-day window expires on July 7. The committee hopes to collect up to 500,000 signatures to be safe and to withstand any possible challenges.

"Today is an important day, an historic day," said Rep. Rick Shaffer, R-Three Rivers. "It's going to have a snowball effect, pardon the pun. When people see the benefits of the fair tax, people will support it."

Sheen introduced House Joint Resolution L on May 8, 2007 with 36 Republican co-sponsors, and the resolution was referred to the House Committee on Tax Policy where it is awaiting a hearing. Sheen said he introduced the resolution three years ago because the Legislature said one of its goals was to reform the tax system to make it more streamlined and simple.

The resolution has little chance of getting any traction in the Democratic-controlled House, but no proposal has been introduced in the Republican-controlled Senate.

"What we have when the governor will not listen and the Legislature will not act, then way to go is the ballot proposal," Sheen said. "Why is it in Michigan the very same thing it wants to attract it taxes, jobs."

Sheen said Michigan residents make all of their purchases with after tax dollars, but with the fair tax proposal all purchases will be made with pre-tax dollars. He said although the sales tax increase is 3.75 cents for every dollar, taxpayers will instead keep 4.35 cents from every dollar. All Michigan residents would receive a monthly rebate to offset the additional items that will be taxed, such as food and services that are not now subject to the sales tax.

Sheen said the sales tax would also cash in on Michigan's vibrant tourism industry because a large amount of our tax burden would be picked up by non-residents who spend money here on goods and services while on vacations.

"Every person who comes here to fish, hunt or boat will pay the tax," he said. "We will export out tax."

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