Labor Voices: Fairer income tax will solve deficit

[Omaha Steve]

http://www.detnews.com/article/20090417/OPINION03/904170324/1008/OPINION01/Labor+Voices++Fairer+income+tax+will+solve+deficit

Friday, April 17, 2009
Mark Gaffney

Once again, Michigan is facing a steep budget deficit. The original estimate is the state would be at least $400 million short by October. Now that shortage could be more than $1 billion by year's end.

We simply do not bring in enough revenue for a state our size. When the slow economy of a multiyear recession is added, the results are worse. In Michigan, we have lost more than 400,000 good-paying jobs since George Bush's first term. Tax revenues are lost as good salaries are replaced by lesser wages, and businesses taxes are lost as firms close.

Some critics say we are not cutting back enough. But Michigan now operates with far fewer public employees. Since 1980, we have 37,000 fewer state, city and county employees.

What costs have been increasing? Food stamp payments for the poor. Nearly half a million Michigan children live in poverty. Should we end that program? I think not. Health costs for the aged, the retired, the unemployed and poor children are increasing. But the well-being of a state's citizens is one of the most important duties of the government. To which of these groups should we refuse to provide health care?

Spending has also been increasing in the Corrections Department. According to the Michigan League for Human Services, we are only one of four states that spend more on prisons than on higher education. But even if we reverse the Corrections spending trend that has increased costs 142 percent since 1985 (we incarcerate far more people than other states our size), that won't fix our state's structural deficit.

Instead, we must change the way we gather the necessary tax revenues to make our state run. It is the only way of fixing our state's constant deficits, and it is the only way of ensuring Michigan can meet its obligation to its citizens.

The 2008-09 General Fund revenues are raised 53.4 percent from individuals' income taxes, 23.7 percent from the Michigan Business Tax and 11 percent from services taxes. With the service industry making up almost 60 percent of our state's economy, it is clear we don't tax services enough.

FULL story at link.