Taxing Internet sales as a matter of fairness

Nowadays, with a growing number of people shopping online, it makes sense to collect sales taxes on the items purchased – if the item was bought at a store nearby, we would have to pay the sales tax.

So, what’s the difference? The difference is that over the past year an estimated $482.4 million worth of sales and use taxes from remote sales will go uncollected by the state. The majority (60%) of that is due to e-commerce.

After stalling on the House floor over a year ago, there appears to be support for moving forward with a package of bills (HB 4202-4303), commonly referred to as the “Michigan Main Street Fairness Act,” which would require the collection of the sales and use tax on Internet sales. The bills would not only bring fairness between brick-and-mortar businesses and Internet retailers, but the move modernizes the state’s tax structure to reflect current consumer trends. The Senate on Thursday passed similar bills, SB 658 and 659, on a 21-16 vote, keeping the issue alive in the lame duck session.

Currently, Internet retailers, such as Amazon, have an unfair advantage because consumers can avoid paying the sales tax and end up paying less for goods than they would have in a store. The Michigan Main Street Fairness Act would level the playing field for the state’s brick-and-mortar businesses and improve competition.

Another added benefit the package brings is tax fairness for low-income people in the state. Those who shop online tend to be more affluent  and are not in need of a tax break. Requiring a sales tax to be collected on Internet sales reduces the inherent regressive nature of the sales tax.

Finally, the Michigan Main Street Fairness Act provides much needed revenue in a way that updates the state’s tax structure. Although, it is estimated that the bills will only bring in $50 million – the state could actually collect more if Congress acted on federal legislation – something is better than nothing when it comes to funding already underfunded schools and communities that have undergone a decade of cuts.

In these last days of the legislative session, we urge House lawmakers to support the passage of the Michigan Main Street Fairness Act to provide a level playing field and modernize the state’s tax structure, but not as a way to provide cover for a road funding shell game.

– Alicia Guevara Warren

Oh Michigan!

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‘O’ stands for October — and it also stands for Opportunity.

With just a few short weeks before the Nov. 4 election, now is your best chance as a concerned Michigan citizen to make a difference. (more…)

Holy smoke Batman! We can reduce poverty

Like Batman and Robin, raising the state Earned Income Tax Credit and minimum wage are best when working together, a new report concludes.

The two strategies are better than one, according to State Income Taxes and Minimum Wages Work Best Together, by the Center on Budget and Policy Priorities. (more…)

Flood waters: a taxing problem

From the League’s First Tuesday newsletter
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My family and I were unfortunate enough to experience the recent flooding in Southeast Michigan. Despite the fact that we lost appliances, some precious photos and an assortment of stuff we had accumulated over the past 37 years, we will be OK. We had insurance and were able to get a company to clean and sanitize our basement very quickly. And we will not need to go into our retirement funds to make our losses whole. (more…)

A stronger Michigan economy is within reach

Yes we can grow Michigan’s economy, create good jobs and expand opportunities for all Michiganians with the right public policy decisions. A new report by Erica Williams at the Center on Budget and Policy Priorities outlines how policymakers can make that happen.

Williams explains that states need to invest adequately in education, healthcare, transportation and workforce development. And in order to do that, they need to make decisions about how to raise and spend revenues with an eye toward the future. (more…)

Camp’s costly change of heart

U.S. House Ways and Means Committee Chairman Dave Camp, R-Mich., is having a very expensive change of heart in seeking to make a corporate tax cut called ‘bonus depreciation’ permanent.

Camp’s previous plan for tax reform recommended ending bonus depreciation. A recently released report by the Center on Budget and Policy Priorities details Chairman Camp’s policy reversal.

Bonus depreciation lets businesses take tax deductions for certain new purchases such as machinery and equipment upfront. The goal is to spur investment and economic growth during recessionary cycles. (more…)

State budget must offer economic opportunity

Join us in urging state lawmakers to support the investments in children and families that are needed to reduce poverty, help low-wage workers, restore funding for public schools and universities, and ensure that communities have the revenues needed to provide the basic services that residents and employers need to thrive and help the economy grow.

Joint House/Senate conference committees are beginning to meet today to resolve differences between the House and Senate versions of the Fiscal Year 2015 budget. After conferees sign a negotiated conference report, the budgets are sent to the full House and Senate, where they can be approved or rejected, but not amended. (more…)

State budget balancing act

As Michigan lawmakers head off to Mackinac Island for the annual Detroit Regional Chamber of Commerce policy conference, they are scrambling to resolve several big ticket issues that have slowed down the budget process and could reduce the amount of money available for services critical to our state’s economic development.

First is how best to fund much-needed improvements in Michigan roads, bridges and public transit. The governor wants at least $1.3 billion a year for improvements while some think that isn’t enough. There is little controversy that something needs to be done, but much disagreement on how to pay for it. (more…)

Feel-good proposal is bad public policy

A new proposal to create so-called sales tax holidays here in Michigan may sound appealing, but it’s poor public policy.

Sen. Mark Jansen’s proposal (Senate Bill 943) exempts certain items from the sales tax for several days prior to camping season, the beginning of school and hunting season. The idea is that eliminating the sales tax during certain times of the year will help low-income taxpayers, spur spending and cost the state little in revenue, but the facts show otherwise.

And because of that, it’s not surprising that in recent years a number of states have ended their sales tax holidays. (more…)

Mich.’s working families pay $247 million more

The numbers are in and they show that the reduction in the Michigan Earned Income Tax Credit from 20% of the federal credit to 6% has resulted in a $247 million tax increase on low-income working families.

Recently released data on the Michigan EITC for tax year 2012 from the Brookings Institution and the Michigan Department of Treasury reveal the actual EITC dollars lost for hardworking Michigan families. (more…)

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