Opinion | Michigan has abandoned cities. Let’s reverse course with online sales taxes

Dan Gilmartin

Dan Gilmartin is executive director and CEO of the Michigan Municipal League

For far too long, Internet-based companies have reaped the economic benefits of doing business in our state without making the investments in local services that brick-and-mortar businesses have made.

That’s why it’s such good news that a recent U.S. Supreme Court decision has finally leveled the playing field for Michigan’s business community by allowing Michigan to enforce existing sales tax laws regarding online transactions.

This ruling can help communities by bringing much-needed revenue to cover police and fire protection, parks, senior centers and other services.

Sales tax revenue represents the second-largest source of revenue for Michigan’s communities. Unfortunately, the state has not lived up to its promise to provide steady revenue streams through revenue sharing, with the net result that the continued deferment from local programs and services to the state’s budget now tops $8.6 billion.

Fortunately, we can start to reverse that trend with the $200 million in sales tax revenue from online sales the Michigan Department of Treasury expects to collect in the coming fiscal year. It’s vital that this revenue go to communities rather than being specifically earmarked by Lansing.

It’s also abundantly clear that the state needs to take this opportunity to begin making important strategic investments in our communities. For too long, we’ve neglected and deferred investment in critical services such as police and fire protection, parks and other local services on which residents rely.

The state of Michigan ranks dead last in the nation when it comes to supporting our communities. This disinvestment in our communities has resulted in our local officials limping along trying to do more with less.

It’s now to the point that many communities struggle to provide basic services such as adequate police, EMS and fire protection, senior programs, trash removal, and snow plowing — all because the state doesn’t properly invest in our communities.

This is hurting our ability to attract and retain talent because we can’t create the kinds of places people want to live and where businesses want to locate.

A recent EPIC-MRA poll showed overwhelmingly that residents want their tax dollars spent locally. The poll showed 86 percent of residents prefer their taxes be used to provide local services, with only 9 percent saying their taxes should go to Lansing to fund state departments and agencies.

While we understand Gov. Rick Snyder’s desire to use this additional sales tax money to fix the roads, the public’s demand that local services need funding can’t be ignored. Our communities ― and our state ― can’t thrive if they don’t offer the types of services that make for attractive, livable communities. This revenue represents a real opportunity for lawmakers to send a message that they understand that, without strong communities, nothing else ― including roads ― really matters.

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Thu, 09/20/2018 - 9:15am

Thank you for pointing this out. "The state of Michigan ranks dead last in the nation when it comes to supporting our communities. This disinvestment in our communities has resulted in our local officials limping along trying to do more with less."
Michiganders are not paying attention to the reality of what has happened over the years and this last 8 years has only magnified the reprehensible condition our state is in. We are at the bottom half of the pack on all quality of life issues, while corporations and business owners continue to receive tax relief among other benefits.

Michigan can't survive such short sighted, selfish policies any longer. WAKE UP Michigan.

Thu, 09/20/2018 - 9:17am

I never understood revenue sharing as an option. Each unit of government has responsibilities and that unit's budget should be based on only those responsibilities. Often, the extra money provided by revenue sharing is not used for a necessity, but only for something nice to have. I would much rather see money from the state level be used to help the truly needy than be used to provide another amenity for a wealthy city that already has more amenities than are used.

Thu, 09/20/2018 - 9:45am

We already know how any windfall will turn out. We'll buy a stadium or give an "incentive" to some corporation to "create jobs". As long as there are two worthless political parties, and they have a stranglehold over the election process and taxation allocation we will always get the worst of the worst to represent "us".

Doug L
Thu, 09/20/2018 - 12:42pm

Michigan has been collecting sales tax on online purchases when income taxes are filed for quite a few years now. Many of my Amazon, and some other online purchases include sales tax. This may lead to some increase in tax revenue, but I believe it will be much less than the author suggests.

Thu, 09/20/2018 - 1:05pm

As usual the Dan Gilmartin and MML is out there trying grab every nickle out of Michigan tax payers possible while not doing a thing to streamline bloated city governments. If cities which we're told are our engines of prosperity and innovation, need more money they can raise their own taxes. If state laws prevent them from this why doesn't MML push for repealing those laws? I for one don't care how much any other given city raises its taxes, that's what local elections are about, and ultimately we vote with our feet, but once again we see how Dan wants to follow you out and still live in your pocket!

Thu, 09/20/2018 - 2:21pm

How about we stop giving the wealthy and corporations tax breaks and instead, tax them. How about closing loopholes only the rich and corps can afford to take advantage of ... how about we stop taxing the 99% more than their fair share. We need to address our neglected and failing infrastructure first.

Thu, 09/20/2018 - 8:13pm

Has recreational Marijuana been legalized already? The wealthy already pay a disproportionately large part of our taxes already, graduated rates or not. But of course you can go full Bernie on them and watch as they stream out to more welcoming states.

Fri, 09/21/2018 - 9:29am

I have read that more than 40% pay zero federal tax since the federal tax rate is based on income with most of the credits going to the less fortunate. Since the Michigan tax, with some exceptions that do not apply to most, is based on the federal tax, then a lot of Michigan residents are paying no tax. As someone else already said, we can vote with our feet if necessary. High tax states such as New York and Connecticut are already seeing an exodus of the wealthy, further reducing their revenue.

Kevin Grand
Fri, 09/21/2018 - 2:32pm

That's a lesson from "The Lost Decade" that even people like Mr. Gilmartin hasn't quite learned yet.

OABTW, people cannot flee Illinois and California fast enough due to the ridiculously generous government benefits bankrupting their respective state budgets. Ironically, both of them ran primarily by democrats.

Kinds of like the OPEB's that Mr. Gilmartin is secretly trying to salvage, without actually coming out and telling readers as much!