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Reason Foundation

Michigan Pursues Telecom Tax

Steven Titch
July 5, 2007, 1:36pm

The Michigan House of Representatives has proposed a public safety surcharge of $1.35 on all phone bills to fund a variety of law enforcement programs, most of which have little to do with telecommunications. In a state that, according to the Tax Foundation, ranks 12th in the nation in tax burden per dollar of state gross domestic product, where businesses are assessed a hefty tax simply for the privilege of doing business in the state, and where, separately, legislators are proposing an increase in the state income tax, telecommunications had been one of the few areas where residents got a break. It was nice while it lasted. The bill, HB 4852, would raise all landline and wireless phone bills by at least $1.35. Since the bill's language calls a tax on each "user," it is unclear as to whether the surcharge will be assessed per account or per line. If the latter, a family with two conventional phone lines and four cell phones will have to pony up another $8.10 a month. For a Michigan business, it would amount to a head tax on every mobile employee in its organization. The bill's title is as misleading as it is cumbersome. Just 24.4 percent of collections from the so-called Emergency Telephone Service Enabling Act will fund emergency telecommunications. Less than 1 percent will go to the 911 non-emergency division. The remaining three-quarters will fund the Forensic Science Division of the Michigan State Police, the Traffic Law Enforcement and Safety Fund, a state criminal justice information system, and the Michigan Commission on Law Enforcement Standards among other agencies. Some of these services are critical, and it's often politically difficult to appear to be against "public safety." But the bigger question is why Michigan, as one of the most heavily taxed states in the country, still finds it necessary to impose special taxes to fund police and fire services. What's really needed is more discipline in state spending so basic public safety services, which general tax revenues are supposed to fund, don't go begging. See the text of HB 4852 and more comments at the Michigan Votes Web site here.


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