Lower the taxable rate.

That's why the BLM weren't thrilled with her proposal.

Since then, I've worked for 3 state governments, and have a bit more insight.  My opinion, however, hasn't changed.  

1.  The taxation dept of any state government is highly computerized.  So too are the compliance tools -- think "TurboTax" only for CPA firms, as well as Quickbooks, etc.  State governments are not known for producing fixes, additions, or replacements to software, especially when budgets are tight.  The first question I'd have is whether that IT structure can be in place by December.

2.  The cost of compliance for small businesses might be considerable.  Take, for instance, a service provider (say, your local computer geek) who doesn't need to charge sales taxes, but now will be forced to do those monthly filings for service sales taxes.  In his case, the costs of compliance will probably be more than the actual money collected.

3.  For the self-employed service provider, this essentially is a 6% income tax.  In a "normal" supply-demand environment, taxes are always passed along to customers, and over time, they probably will once a bunch of service providers go out of business.  However, in the near- and mid-term, the current price pressures will prevent price increases.  Heck, if I could raise my fees by 6%, don't you think I would?

(pause)

YA know, I'd love to work in Michigan.  So would about 25% of our residents who are now unemployed.  And, we haven't even talked about the large number of people who are working out of state, or have moved to find employment.  

Bruce, just how do you expect that lowering the income tax rate will accomplish any damn thing useful?  The State Treasury estimates for 2008 (when the income tax rate was 4%) were that they had a 19% shortfall between revenue expected and revenue collected.  The reason for this is that there are several groups of people in this state who do not report their income honestly, if they report it at all:

• Criminal enterprises (this includes everything from sophisticated organized crime to the typical street corner hooker or drug dealer)

• Gamblers (those winnings don't have to be reported unless they exceed a certain threshold per day . . . I believe it's $600.00)

• Cash-only businesses and transactions (I'll just let your imagination run on this one)

• Illegal aliens ('nuff said there)

By the way, Michigan Works isn't a state government entity per se . . . do your homework there.

Jason, the purpose of the prebate should be considered in the context of both the expansiveness of what will be taxed under the Michigan FairTax Proposal and whom it locks out of the "benefit" system.

Note that, right now, between 16% and 20% of everything sold at retail is in reality embedded state business taxation.  And that's not just the business that you're buying that product or service from; it's also that business' entire supply chain.  (Think of it as the multiplication effect of taxation.)

So strip out that corporate taxation (which will force prices down in a free-market scenario) and instead place a sales tax on everything new sold at retail.  (Remember that MFTP doesn't tax used items.)  And this means everything:  All commodities and services (including groceries).  No exceptions, no loopholes, nothing left uncovered.  So now all of those people who aren't paying into the system now (see the list above) can't escape their tax burden . . . because sooner or later everyone buys retail.

Now the last I checked, certain necessities aren't available in "used" form, so the only way to purchase gas or groceries is "new" at retail.  (Though I hear Al Gore is looking into developing a cottage industry for used gasoline.)  And thus, to avoid screwing those who truly are poor, the prebate was developed.  This way everyone, and I do mean everyone, who is a legitimate resident of Michigan gets an assist every month, but the poorer end of the economic scale will derive the greatest benefit from it.

For someone like Dick DeVos, that $85 per month (single adult) isn't going to make that much of a difference; but a guy like me who's just barely getting by right now can put that money to good use, either as two tanks of gas or an extra grocery run.

But keep in mind that the illegals and the tourists are specifically locked out of this benefit.  Thus, these two groups of people pay into the system that keep this fine state running, but reap zero (as in zilch, zip, and nada) benefit from that system!