Tax Services to Fund Schools? NO

The Detroit Free Press / Robert D. Fowler

State should live within its means, help to grow, promote thriving economy

First, let me say that I agree that the State of Michigan, and in particular our schools, need revenue. We have differences of opinion over priorities and precise levels of funding, but in the end we must have some amount of revenue every year to fund vital services like educating our children.

The question is how to generate that revenue. I disagree with the proposal that the best way to meet the revenue needs of state government and public education is by imposing a sales tax on services. That's a tax hike, plain and simple, and it increases the overall tax burden on struggling Michigan citizens.

We need to get away from the tired old prescription of addressing revenue shortfalls by automatically seeking additional taxes. Part of the solution involves structural reform of state spending that makes state government operate more efficiently and live within its means. That makes perfect sense to small business owners. These entrepreneurs across Michigan have worked ceaselessly, and made tremendous sacrifices, to find ways to live within their means. They expect state government to do no less and are very impatient with the business-as-usual attitude they perceive in Lansing.

But you may be surprised to hear me suggest that another important part of the solution is growing government revenues, but growing them the right way -- not by expanding the tax burden but by fostering a vigorous and prosperous state economy, an economy that provides an appropriate level of tax revenue that meets the needs of public services and schools, without levying an undue tax burden on the private sector.

A thriving economy begins with entrepreneurial business growth that energizes job creation and boosts incomes. That in turn generates revenue for government. But a sales tax on services hurts consumers and hurts small businesses by taking dollars out of their pockets, and away from business growth in the private economy, and transferring an even higher percentage of private resources to the public sector. That's exactly the wrong formula for solving our economic woes.

We're at a tipping point in Michigan's economy. We can either add taxes, in the form of a sales tax on services that further burdens our struggling consumers, or we can take down barriers to business and income growth. Meeting Michigan's revenue needs begins with expanding Michigan's economy, continues with real structural spending reforms and concludes with a higher level of prosperity that benefits everyone in our state.

Robert D. Fowler, is president and CEO of Small Business Association of Michigan