This year is unique in many ways, including for state taxes. Did you know that Tax Day has never been artificially extended since we started collecting federal income taxes? Originally, Tax Day was established as March 1 by Congress after the passage of the 16th Amendment in 1914; Tax Day was changed to mid-April in the 1954 Internal Revenue Code.
Since 1914, hard-working people from all corners of the country have dutifully (and somewhat haphazardly) filed and paid their federal income taxes. Through wars, economic recessions, and all manner of calamity, people have found a way to fund the essential programs and services that local, state and federal governments provide.
Fundamentally, taxes support public spending on priorities that the Legislature and governor have identified for the state. Among these are spending on public education, community colleges, healthcare, environmental protections and infrastructure. The government uses taxes as a tool to ensure that Michiganders live in thriving, equitable communities.
This year, taxes are a particularly relevant topic in the face of the COVID-19 pandemic. Specifically, Michigan’s tax system is revealing some gaping flaws in our ability to raise revenue for times of crisis. Anti-tax laws and rhetoric have dominated the conversation over many decades, which has led to underinvestment in everything from our roads to our kids, and our current state tax system is tilted to benefit wealthy individuals and corporations. Without additional federal relief, Michigan could be facing substantial cuts as the economic impact of COVID-19 plays out over several years. The Legislature and governor are working on a deal to balance the state’s budget without any discussion so far of increasing taxes on those who have the ability to pay, namely corporations and the wealthy.
Policymakers need to be focused on two things at this moment. First, they need to work to obtain more federal aid using whatever channels they can to protect families and communities. Second, they need to work to raise new state revenues to ensure the state’s fiscal stability in the future.
Earlier this month, we released a report that details some of the options we have to overhaul our tax system so that corporations and the wealthy contribute to the state’s coffers. Implementing these laws would ensure that we have enough funding to have a top-notch education system, stable infrastructure and healthy communities.