OUR VIEW: State is sustaining the unsustainable

By Darrin Clark • Last Updated 7:26 am on Monday, March 12, 2012

Michigan has a number of municipalities and school districts going bankrupt, and the special interests most influential in bringing those institutions to that point are pushing for a state referendum to stifle the state’s emergency manager program.

Their goal is apparently to sustain the unsustainable.

So where will the money come from? Who will reign in the unsustainable expenses? Who will ultimately answer for the incompetency of management of some Michigan’s cities and school systems? For the sake of Michigan’s future those questions must be faced unselfishly. But fulfilling the obligations of our state budget has a few more twists and turns.

Now comes the question of how Michigan can rid itself of Michigan’s personal property tax. The tax is not really personal at all, because it applies only to Michigan business entities. It’s an annual tax on the equipment and furnishings of Michigan businesses. The complexity of the tax is difficult for business to comply with and for Michigan government to administer. Furthermore, it acts as a disincentive for companies to spend money for new equipment. When additional equipment isn’t purchased, our companies aren’t expanding, their vendors aren’t selling new equipment, and new jobs aren’t forthcoming. The result is another barrier to the growth of state productivity. So let’s dump that tax, because it’s costing jobs.

But wait! That tax represents more than a $1 billion of state revenue that we cannot do without. Michigan schools and municipalities are already in financial distress, and personal property tax dollars go to schools and municipal governments. The revenue must be replaced somehow, and you’d better believe individual taxpayers have a direct interest in how it all works out.

It would be naïve to look at this as just another dispute between business interests and the general public over who pays the taxes. Michigan citizens and their business and industry neighbors are in this together, and if the solution of the tax struggle doesn’t result in more jobs for our people, then we all lose.

There’s no doubting the severe financial challenge these days stems from lack of jobs. In spite of that, the public demand for services and the public liabilities for entitlements continue to grow. But the public can’t pay the taxes if they don’t have jobs … and a tax structure that allows business to prosper is the only way that can happen.

Michigan Speaker of the House Jase Bolger has insisted that the personal property tax will not be scuttled until lawmakers have the means to replace the lost funds. It’s possible that expiring business tax credits could make up for half that revenue.

It’s ultimately a matter of the quality of life in the state we live in. We all have a responsibility to become aware of what’s happening and to speak our piece with some knowledge of the issues. The compelling voice of an intelligent, informed electorate able to understand the compromises necessary to move forward is our only hope of moving forward.

Editorial opinions are the consensus of The Daily News editorial board.

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