Michigan’s sales tax a rare bright spot in economic downturn

Thanks to pre-COVID legislation, Michigan is collecting sales tax on all online orders in the state.

Call it forward-thinking: Michigan’s lawmakers got together late last year to pass legislation that makes it easier for the state to collect sales tax on things people buy online.

Whether it’s buying a laptop on Amazon or an ebook from the local bookstore, Michigan collects 6% of every sale, collected by the retailer and submitted to the state.

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When the coronavirus pandemic began in March, online sales began to tick upward. According to an article on MLive, sales tax revenue jumped by $140 million from April to July of this year compared to the same period in 2019.

Michael McWilliams, an economic forecasting specialist with Research Seminar in Quantitative Economics at the University of Michigan, said you can thank the stimulus package passed by Congress in March for the increase in tax revenue.

“It’s great that consumers are out there spending money, and that’s what the economy needs right now,” he said. “That increase in consumer spending that we’ve been talking about is really a product of that extra money in people’s pockets.”

It’s not all good news though. Michigan is on track to see an overall decline of $500 million in sales tax revenue for the year. The boost in online sales is helping to soften the blow, but it isn’t expected to help us dodge it.

You can read the full story here.

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