I’ve been trying to learn about taxation in my current home state of MI due to today’s vote on Proposal 15.1 – the road tax mess. I learned enough to vote NO. Here is something that I realized early on and that I think is key to Michigan’s problem: Michigan has a bad habit of slicing and dicing tax revenue so to make the name of the tax and what it supports pretty much completely unrelated.
In most states, a fuel tax goes to pay for road construction, a school tax goes to pay for schools, and so on. But not in Michigan. In Michigan, the fuel tax pays some portion to roads, some to schools, and some to other programs. Nearly every tax levy in Michigan has a slice taken out to fund schools. This obviously helps get the tax passed (think of the children!), but in reality, it makes it almost impossible to use the tax for what it was intended for. Hence our road situation – the fuel tax has been sliced and diced so much that it no longer has any positive impact on road funding. But the children!
Had the state legislature put their collective foot down and said “you know, we’re going to shift the slicing around and make the road tax on fuel actually 100% for road repairs and size it appropriately” and then called it a day, the citizens of Michigan would likely be voting YES. Instead, they made the slicing even more complex (and expensive, and progressive).
Hopefully, today, my co-residents will also say NO to this absolute cluster of taxation and send the legislature back into session with a mandate to do something useful.