State Tax News Update

July 8, 2005

Michigan lawmakers continue to haggle over how exactly to improve the state’s woeful business climate. On July 7, Governor Granholm reiterated her stance that any change to the state’s Single Business Tax (SBT) be revenue neutral. Michigan lawmakers should be less concerned with revenue neutrality and more concerned about how their tax system impacts their business climate. Michigan has the worst corporate business tax climate according to the Tax Foundation’s State Business Tax Climate Index, so revenue neutrality certainly should be a secondary concern to fixing a tax system which may be driving business from the state. See Chris Atkins’ commentary on revenue neutrality, Revenue Neutrality: Taxing Peter to Give Tax Cuts to Paul?, and our index analysis of Michigan’s SBT to learn more about the situation in Michigan.

In Kansas the legislature passed a bill to accommodate the Supreme Court’s mandate that education spending be increased $143 million. Fortunately for Kansas taxpayers legislators were able to comply with the court’s order without passing a tax increase due to increasing tax revenues. However, if the state is forced by the court to increase spending in the future a tax increase seems likely. Kansas can ill afford to increase taxes as they currently suffer from a poor overall tax climate. See our recent commentary on the situation in Kansas for more details about the state’s business climate.

Note: Reports from BNA’s Daily Tax Notes used to compile this post.

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