Great Lakes Politics

Governor Jennifer M. Granholm (D, MI) announced this morning that she was appointing a bi-partisian, twelve member advisory panel to make recommendations on how to remedy Michigan's budget problems.  The new Emergency Financial Advisory Panel is co-chaired by former Governors William G. Milliken (R) and James J. Blanchard (D).

Ms. Granholm has asked that the panel report back with its recommendations by the end of January.  Since that only gives them a couple of weeks to figure out how to resolve a budget deficit that is estimated at close to $500 million, I believe that it would be good to give them a couple ideas to get the process started.

Quite frankly, I believe that Michigan can do a lot to soften the blow of budget cuts by simply doing a better job of collecting the money is already owed to the State of Michigan under existing tax laws.

For example, the Detroit area alone is home to 47 different strip clubs.  Add in the rest of the Great Lakes State and you have a total that is close to 100 of these clubs.

The women who dance in these clubs can earn a rather significant income, with some of them approaching the $100,000 mark each year.  More importantly, they earn it entirely in cash.

Many of them are honest enough to pay taxes on their earnings.  Some them, however, do not pay any taxes at all.

According to some quick calculations that I did, targeting them for collections should garner the State of Michigan an additional $1.5 - 2 million in tax revenue.  That, of course, is a long way from solving Michigan's budgt problems.  However, every million that we are able to collect in taxes is a million that we don't have to cut from our schools or anywhere else in the budget.

It would be relatively easy to identify those dancers were aren't paying the income taxes that owe.  All dancers in Michigan are required to get caberet license from their local police department.  If the Michigan Department of Treasury were to simply cross-reference a list of individuals with such a license with their list of people who filed an income tax return, they could quickly identify those who aren't paying taxes on their income.

Plus, if this was done in concert with the Internal Revenue Service and the various Michigan cities that levy a local income tax, the burden of enforcement would be that much easier.

Continuing on the subject of collecting what is already owed to the State of Michigan, I was at a comic book convention last May at the Rock Financial Showplace in Novi.  I saw close to a quarter million in sales happen that weekend and none of the dealers collected any sales taxes on those transactions.  Since many of them actually came in from out of state, it's a fair guess that the Michigan Treasury never got its 6% cut.  That works out to roughly $15,000 in lost revenue.

I know that $15,000 really doesn't sound like much when one is thinking about a $500 million budget shortfall.  That is, until you remember that it's $15,000 from just that one weekend at just that one location.  Since there are events like this happening pretty much every week at more than a dozen locations throughout the Great Lakes State, one can reasonably expect that a better enforcement of Michigan's sales tax would bring in another $10 million or so to the Treasury.

We're still a long ways away from the $500 million that is needed to balance Michigan's budget shortfall.  However, the more we collect, the less we have to cut.  Since everyone in Lansing has their own program that they don't want cut, everyone in Lansing has vested interest in making sure that these other options to collect tax revenue that is already owed to the State is pursued.