Taxing Students

Students at Michigan State University who work around campus to help pay their tuition may find it harder to afford the high cost of their educations, if East Lansing’s city council gets its way.

University officials and community leaders alike are sounding the alarm over a proposal to impose an income tax on workers in this college town of 50,000 residents, 60 percent of whom are students.

These critics charge that the new tax would reduce spendable incomes and make it harder for East Lansing’s businesses to attract workers into the city. Evidence shows they are right.

Michigan’s most highly taxed cities experienced a decline in economic growth and population from 1980 to 1990.

Detroit, with a 3 percent income tax and overall tax rates six times higher than the state’s municipal average, suffered an 11 percent decrease in per capita income and a 15 percent drop in population.

At the same time, lower tax cities like Grand Rapids enjoyed both economic and population growth.

The East Lansing City Council should not punish students and nonresidents with a tax for working in the city. The experiences of cities like Detroit and Grand Rapids demonstrate that new and higher taxes are not the way to prosperity.

For the Mackinac Center, this is Catherine Martin.