The Tax Attic — by Roger Allen, publisher

Jerry Coon, Enrolled Agent

Jerry Coon, Enrolled Agent

Issues beyond our comprehension

My minister, Rick Tigchon, recently based his sermon on a Dr. Seuss book concerning going “beyond z.” The point of Rick’s sermon was that from time to time, we encounter events that simply just are not explainable. They go beyond our comprehension. They go where our alphabet currently ends at “z.”

Of course, the number one example of this, especially applicable at this Christmas season, was the pregnancy of Mary and the subsequent birth of Christ. Mary was a virgin. Now that really was “beyond z.” All other events pale in comparison to this, but I do have one of my own to pass on.

This past week, I was driving to the office on Northland Drive near 12 Mile Road when two deer just shot across the road in front of me. There was lots of traffic and they were lucky to clear all five lanes without getting hit. We all know the basic rule of thumb when it comes to deer—they travel in threes—so as I slowly continued on to the north, I looked into the woods where the other two deer came from. Sure enough, the third deer was standing in the woods. I kept watch in my rearview mirror and was surprised at what I saw. That third deer slowly walked up to the shoulder of the road and stood there, apparently looking and watching for cars to go by. When he was satisfied it was safe, he jumped across the road. Either that was the smartest deer in West Michigan or I had seen a “beyond z” event.

Another example of something that goes beyond our comprehension is what has been happening with our state legislature—talk about going beyond z! The fiasco in Lansing goes beyond triple z. Tom Pearce, our local House Representative, has made several

local appearances in the past few weeks. I was fortunate to hear him speak at a Rockford Chamber of Commerce luncheon last week. Tom is one of the good guys in the political arena and, in his final term, is doing his best to get good solutions to our current problems. Good luck, Tom.

Among other issues, our state legislature has not dealt with the fact that our state economy has been changing from a manufacturing-based economy to a service-based economy. The decline of the automobile industry with the resulting loss of the associated high-paying manufacturing jobs—not to mention the collapse of the construction business—has thrown Michigan’s tax receipts from withholding into a downward spiral.

In addition, sales tax receipts are down because the majority of those taxpayers who previously were receiving wages from those high-paying jobs are either not working and drawing unemployment, not working and not drawing unemployment, working at lower-paying jobs, retired, or moved out of Michigan. Any way you cut it, they aren’t earning wages or buying items and paying sales tax like they were just a few short years ago. This change is most likely permanent.

According to Tom, one solution might be to decrease our overall sales tax rate from 6% down to 5%, while making sales tax applicable to most services. They tried this a few years ago, but it was an ill-conceived process and failed miserably. As I understand it this time, the program will be fully explained before it’s implemented. Right or wrong, full disclosure is important.

Another part of the puzzle concerns health insurance. The legislature would pass a law requiring all employees of the state of Michigan and her political subdivisions, including schools, to pay a percentage of their health insurance premiums. Evidently, the average employer, nationwide, requires its employees to pay about 28% of their health insurance premium. The percentage Michigan employees would be required to pay is not written in stone, but 15% seems to be mentioned the most. This 15% would replace a good portion of the shortfall the local schools are currently experiencing.

Neither of these laws is passed as yet. They are just in the talking stage and, as we all know, talk is “triple z” cheap in Lansing. It will be interesting to see what the legislature comes up with. This is Jerry Coon signing off.

Jerry Coon is an Enrolled Agent. He owns
Action Tax Service on Northland Drive in Rockford.
Contact Jerry at www.actiontaxservice.com.

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