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Economist: Michigan Should Tax Entertainment, Services

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DETROIT (WWJ) - Michigan needs a new tax on services. That’s the message Michigan State University economist Charles Ballard will deliver Thursday morning as part of his 2012 economic forecast for the Engineering Society of Detroit.

Ballard said Michigan has been cutting taxes, but we are not better off.

“Cutting taxes, all else equal, will create jobs. But, if you cut taxes and lay off teachers and police officers and firefighters and let your roads and bridges crumble, then remember that all else is not equal. The goal is not to minimize taxes, nor is it to maximize taxes. It’s to find the right balance between the very real cost of taxes and the very real benefits of things like education.”

Ballard said in order to pull Michigan back into economic shape, the state needs to tax services like movies and sporting events.

“To make the investments in education, and also in transportation infrastructure, that I think are important for our future, it’s going to cost money. So, I’m going to say something that’s probably not very popular but I’m going to say it, that I think we need to stabilize the revenue system. In particular, I think we need to extend the sales tax to services and entertainment, because those have been growing much more rapidly than the things that are taxed.”

Ballard said he doesn’t think Michigan will be able to move forward without a new tax.

“If cutting taxes were the secret to success, were the only secret to success, Michigan’s economy would be booming. Instead, what we have done is we’ve lost ground relative to the national average for the last 40 or 50 or 60 years, at a time where we’ve reduced our taxes and so, keeping taxes low has to be only one part of the strategy.”

Ballard will deliver the Engineering Society of Detroit’s 2012 economic forecast Thursday at Laurel Park Manor.

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