Michigan Controversy: Prison Inmate Sales Taxes

Michigan House Passes Legislation Requring Inmates in Prisons to Pay Sales Tax on Purchases

UPDATE: 5/9/2012 HB 4658 was signed into law eliminating the sales tax exemption for sales of tangible personal property to inmates in a penal or correction institution. This change goes into effect October 1, 2012.

Is the Prison really selling inmates and charging sales tax? Well, no, but the state of Michigan House of Representatives has just passed House Bill 4658 (HB 4658) by a 93-13 vote and the single word addition along with a date to one section of existing legislation has created quite a stir.

HB 4658 is a “…bill to amend 1933 PA 167, entitled ‘General sales tax act,” originally passed in 1971. The bill amends one section as follows:

BEFORE: “ …the following are exempt from the tax under this act: … A sale of tangible personal property to inmates in a penal or correctional institution purchased with scrip or its equivalent issued and redeemed by the institution.”

AFTER: “…the following are exempt from the tax under this act: …BEFORE [OCTOBER 1, 2012], A sale of tangible personal property to inmates in a penal or correctional institution purchased with scrip or its equivalent issued and redeemed by the institution.”

The law, enacted in 1971, exempts inmates from paying sales tax on purchases of sundry items and personal care goods or any other tangible personal property while incarcerated. The movement of this bill from the House to the Senate has garnered a large array of commentary for and against. Here are some of the For and Against arguments:

FOR

  • Restores fairness and provides additional revenues for the local communities and schools.
  • Would bring in an estimated $500,000 per year.
  • Food items will still be exempt.
  • The homeless people pay this tax.
  • Not asking prisoners to pay any more or less than anyone else in taxes.
  • Lawbreakers shouldn’t get a tax break.

AGAINST

  • Wages from working while incarcerated are unusually low and inmates and their low income families “…already pay … ‘exorbitant rates’ to talk to prisoners on the phone.”
  • Wages can range from one to a few dollars a day.
  • Prisoners do not have the right to vote so this would be taxation without representation.

In addition to the arguments for and against, comments on the articles written regarding the bill have included:

  • Taxpayers are supplying three meals a day, housing and healthcare…sorry if their pay is so low, but many people on the outside are making very low pay as well.
  • Legislators should begin to look to themselves and their own pay and benefits for cuts.
  • We should reduce costs through using tethering not incarceration for offenders.
  • Make ‘em pay.
  • Things are not really bad for the inmates and we shouldn’t feel sorry for them.
  • Taking sales tax from a prisoner making 17 cents an hour is ridiculous.”

Strong feelings have been expressed in response comments on mlive.com, ranging from direct suggestions for other solutions, to supporting the measure, to arguments about religion, politics and social issues.

This is one sales tax issue that has a few hackles raised and a lot of discussion in the news.

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About susan.mclain

Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”
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