Proposed legal service tax could be nixed

Following the release of Gov. Jennifer M. Granholm’s proposed 2011 state budget, Rep. Alma Wheeler Smith, D-Salem, has indicated that a substitute bill is being prepared that would exempt legal services from the 5.5 percent service tax rate in the plan.

Granholm’s budget called for an across-the-board 5.5 percent service tax on everything from dry cleaning to estate planning, along with a reduced sales tax of 5.5 percent.

As Michigan Lawyers Weekly reported in its Feb. 22, 2010, edition, small- and mid-sized attorneys were against the surcharge, and that the State Bar of Michigan was doing hard lobbying to quash the tax for attorneys.

Elizabeth K. Lyon, director of governmental relations for the State Bar of Michigan, said it was “a misery tax,” adding that “Legal services are no more discretionary than medical services, and if medical services are exempt, so should legal services.”

Apparently, Smith feels the same way.

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