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Michigan Taxes Train Tickets
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Author:  Aarne H. Frobom [ Tue Oct 02, 2007 12:24 pm ]
Post subject:  Michigan Taxes Train Tickets
In the early hours of Monday morning, October 1, four hours after the start of the new fiscal year, the Michigan legislature passed a bill applying the state's 6-per-cent use tax to a list of services. The list includes fortune tellers, baby-shoe bronzing, port-a-john rentals, escort services, phrenologists, business consulting, bail bonds, and "scenic transportation services as described in NAICS Subsector Code 487." Sector 487 includes "obsolete vehicles, such as steam trains."

As near as I can tell, beginning December 1, 2007, The Steam Railroading Institute, Greenfield Village, and the Huckleberry Railroad must collect 6 per cent tax on all ride-ticket sales (including the omnibuses, boat and Model T's, but not museum admissions). The Bluewater Chapter NHRS, and operations at Coldwater, Coopersville, Walled Lake, Charlotte, and Blissfield must pay, too. This is just in time for Christmas-related ticket sales at some of these operations. (If we're lucky, the bulk of our "North Pole Express" sales may be completed by then, but applicability of the tax to sold but undelivered trips is uncertain.)

The target of the tax seems to have been the $100 carriage rides at Mackinac Island, but the legislators also nailed charter fishermen, dune rides, tour-boat operators on the rivers and lakes, airplane rides, and the Soo Locks boat tour. This suggests a possible alliance of interests for a repeal. Competing big-money entertainments, such as movie, concert, and ball-game tickets, were not taxed. I'm guessing that the use tax does not distinguish between business and nonprofit taxpayers. I'd like to be corrected on that point, but I'm not hopeful.

In the interest of commiseration and information collection, how many other states tax ticket sales at museums, historic sites, and tourist railroads?
Author:  wesp [ Tue Oct 02, 2007 1:07 pm ]
Post subject:  Re: Michigan Taxes Train Tickets
As a tax-exempt non-profit we are exempt from the "amusement" tax in Maryland. We collect sales tax on museum store sales. The tax-exempt strategy may be your best bet for some accomodation from the law.

Wesley Paulson
National Capital Trolley Museum
Author:  Alexander D. Mitchell IV [ Tue Oct 02, 2007 1:13 pm ]
Post subject:  Re: Michigan Taxes Train Tickets
Quote:
The target of the tax seems to have been the $100 carriage rides at Mackinac Island


All of a sudden, my previous desire to visit Mackinac Island has diminished on the order of 95%..............
Author:  Ray Reter [ Tue Oct 02, 2007 1:38 pm ]
Post subject:  Re: Michigan Taxes Train Tickets
Keep in mind that sales taxes are paid by the purchasers buying the goods or services. The entity selling the goods or services being taxed is merely the collection conduit for the taxing agency. I remember seeing a sign in a store that read "We don't charge sales tax. We collect sales tax for the state." A subtle reminder to the purchaser as to whom to complain to! -- Ray
Author:  SZuiderveen [ Tue Oct 02, 2007 2:40 pm ]
Post subject:  Re: Michigan Taxes Train Tickets
Ray,

My brother is an independent master electrician. His problem with the new sales tax policy in Michigan is not the sales tax per se, it is that he now has to collect it, process it and remit it. That is bureaucratic and will cost him time (and money) to accomplish.

The same goes for all of the small time not-for-profit tour operators that previously did not have to deal with it. They will now have to learn how to collect and process sales tax receipts.

Steve
Author:  JohnC [ Tue Oct 02, 2007 2:44 pm ]
Post subject:  Re: Michigan Taxes Train Tickets
This topic reminds me of a sign I saw in a Hobby Shop recently:

"Don't Steal-The Government hates competition"
Author:  Aarne H. Frobom [ Tue Oct 02, 2007 3:28 pm ]
Post subject:  Re: Michigan Taxes Train Tickets
Like a lot of low-volume retail outfits, our gift-shop items are priced in round numbers including sales tax. Then we pay 6% in an accounting maneuver, to make it easier on the persons in our gift shop and souvenir car. So we're used to thinking that we pay the tax. Expensive excursion tickets would probably be handled differently.

If we wind up collecting this tax, I suspect we will post a sign on the wall and in our printed matter that says something like, "Under Michigan P.A. 93 of 2007, beginning Dec. 1, 2007 a tax of 6 per cent will be added to all ticket prices." That will deflect the anger where it belongs, but of course the tax still intrudes on our capacity to raise prices. In effect it will claim some or all of our next price increase.

It may also be possible to obtain a ruling that as a 501(c)(3) organization we're not selling "transportation" within the meaning of the Census Bureau codes, but that riders are attending a demonstration of historic technology for educational purposes. Indeed, that is how we conceive of our excursion program, anyway. "It's not transportation, it's education."

Or, in public-policy language, "It's not an orgy - it's a toga party.
Author:  Heavenrich [ Tue Oct 02, 2007 8:00 pm ]
Post subject:  Re: Michigan Taxes Train Tickets
I suggest having a lawyer or CPA look at the exact wording of the new law before jumping to any conclusions....... college sports events will not be getting taxed.... the same may apply to other non profits.

Bob H
Author:  Kevin Gillespie [ Tue Oct 02, 2007 9:21 pm ]
Post subject:  Re: Michigan Taxes Train Tickets
The Michigan legislature should remember a quote from President Reagan, "No society has ever taxed its way to prosperity."
Author:  pm-man [ Tue Oct 02, 2007 10:38 pm ]
Post subject:  Re: Michigan Taxes Train Tickets
Yeah, well, Reagan also had to the foresight to sign the bill for the California State Railroad Museum --- we in Owosso, Flint, and Dearborn aren't lucky enough to have had someone with similar understanding of what the role of rail preservation/ steam operation could mean to bringing others and their tourism dollars into our state.


Ah, to find the legislators who could understand the significance of bringing in 52 photographers from all over the world to central Michigan to create timeless images like this:

Image

Although, sometimes, you do get LOCAL business people/ reps who get the idea, thank which ever higher power you choose to believe in:

Image

Whoa be those of us who live in states with short-sided legislators, ah Aarne?

TJG
Author:  superheater [ Wed Oct 03, 2007 12:00 am ]
Post subject:  Michigan, Jeff Daniels, The Power to Destroy - Taxes coming
If I did not ply my trade in an organization that reported to my State's Budget Secretary (many levels higher) , I would be somewhat shocked at both the expansion of state sales taxes and the high drama in Lansing.

Afterall, every morning and every afternoon, Jeff Daniels invokes me to leave my state and come to Michigan to take advantage of Michigan's multi-billion dollar jobs fund (and I'm assuming Mr. Daniels and my local radio station must be compensated for their services)-one might naturally assume that Michigan had a largesse. Interestingly, my state has multiple similar "funds", one disbursed a rather large sum to a debacle known as the Franconia brewery about a decade ago, a microbrewery located on the D-L Steamtown mainline that had a built-in incentive to fail-majority ownership by founder.

As it is, I'm quite aware of the forces driving the voracious appetites of states. While I'd love to think its just politicians interfering in industry, buying votes with poster-sized novelty checks, that's not it.

In my state something like 2 of every 5 dollars is spent on welfare, driven primarily by the growth in the elderly population, and businesses that base their compensation practices on offloading employee healthcare on the public.

Additionally, the Government Accounting Standards Board has required greater and greater disclosure of pensions and "other post-employment benefits". Now, big obligations on on the state "CAFR's".

There's other factors in individual areas as well. In my state the education lobby has pretty much tapped their ability to bring in revenue through property taxes, they're pressuring for an expansion of the sales tax base or increase in the rate or both.

Expanded tax bases are coming everywhere. There's of course the natural tendency of government to seek more green, but economists tell us expanded tax bases are more efficient-avoiding the inexplicable inanities of exemption. Buy burgers frozen, not taxable. Buy them hot taxable. In my state, "necessities" are exempted-until 15 years ago, delivery pizza was a necessity.

In short, expect more of this!

The power to tax involves the power to destroy.
Author:  wm303 [ Wed Oct 03, 2007 12:55 am ]
Post subject:  Re: Michigan Taxes Train Tickets
Politicians and babies diapers have one thing in common, and for this reason both should be changed regularly.
Author:  bbunge [ Wed Oct 03, 2007 7:40 am ]
Post subject:  Re: Michigan, Jeff Daniels, The Power to Destroy - Taxes com
Quote:
Afterall, every morning and every afternoon, Jeff Daniels invokes me to leave my state and come to Michigan to take advantage of Michigan's multi-billion dollar jobs fund


No kidding! Every day, several times a day in a very expensive market, no less!

From the original message, one has to assume there is only one body in the Michigan legislature and the governor has no power of veto?

- Bob
Author:  SZuiderveen [ Wed Oct 03, 2007 9:21 am ]
Post subject:  Re: Michigan, Jeff Daniels, The Power to Destroy - Taxes com
bbunge wrote:
From the original message, one has to assume there is only one body in the Michigan legislature and the governor has no power of veto?

- Bob


Hope I remember this correctly (I am an ex-Michigander) but her Governess is a Canadian-born, California-educated Democrat replacing past Republican governors who had fairly decent national standing (sound familiar, Bob; fellow Marylander?) My family is from what is called "Up North" in Michigan (anything north of Route 46). Father is vice chairman of a county Board of Commissioners, very conservative Republican, who now has a $280,000 deficit due to removal of payments by the Governess. Michigan has a full time two party legislature; but like Maryland, it is now all Democratic. Small businessmen and tradesmen are rather upset with the present state of things, the economy in Michigan is one of the worse in the nation, and "Up North" has many recall petitions circulating; however, they probably do not have the numbers to override the urban southern part of the state.

The common catch phrase is "600 people are leaving Michigan each day to look for work" (I do not know the truth of this statement) So, please, as Mr. Gaffney states in another post today, come to Michigan, enjoy big steam ("Up North!") and leave a few tourist dollars behind!

Steve
Author:  Alan Maples [ Wed Oct 03, 2007 11:18 am ]
Post subject:  Re: Michigan Taxes Train Tickets
Aarne H. Frobom wrote:
In the interest of commiseration and information collection, how many other states tax ticket sales at museums, historic sites, and tourist railroads?


Many years ago I had peripheral involvement with an excursion train tax issue in Maryland. As I recall, interstate transportation services were not subject to state sales tax but on board food & beverage sales were. However the overriding issue was whether the privately owned excursion train - operated on a common carrier railroad - was "interstate transportation" to begin with. The state ruled not and declared it an "amusement" which was subject to a completely different set of tax laws. Amusement taxes applied to the entire sale price, were higher than sales taxes, were collected and remitted in a manner similar to sales tax, but were passed along by the state to the county or municipality.

As I recall, management tried to make the "transportation" claim so the operation would fall under the sales tax law (and thus the exemption). I think the company lost the argument, which was probably just as well, since being recognized as transporation company might have placed them under Railroad Retirement & FELA, which would have been far more costly than the amusement tax. The whole issue was rendered moot when the operation went bust anyway.

In Pennsylvania, we had a nasty battle some years ago over Gross Receipts Taxes, which railroads (as public utilities) were subject to. The fight was over the definition of "interstate" and resulted in a lot of money being spent on lobbyists in search of a legislative solution. In a rare instance of coming out with more favorable treatment than you expected, a legislative committee decided the amount of tax involved was inconsequential and simply repealed it to end the fuss.

Alan Maples
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