Tax on Legal Services Would Fall on Those Who Can Least Afford It

    March 19, 2007
    Michigan Lawyers Weekly
    Opinion
    By Kimberly M. Cahill

    Governor Jennifer Granholm's proposed 2 percent tax on legal services in Michigan will hit low- and moderate-income taxpayers the hardest, especially those already experiencing a loss and financial problems.

    The State Bar of Michigan places a high value on access to justice for all our citizens. We have raised more than $5 million to support legal aid initiatives and we urge our 38,000 members to donate their services to the less fortunate. Each year, lawyers donate thousands of hours of free legal work to the poor and provide services at reduced rates to make their work affordable.

    Despite these efforts, many legal needs of the poor are not met. It would add a tremendous burden on individuals forced to seek legal advice due to injury, death, divorce, child support, bankruptcy, debt collection, criminal defense, and similar matters.

    The need for legal aid services in Michigan is never-ending. Last year, approximately 50,000 indigent residents in Michigan were served through legal aid programs to protect children, the elderly, veterans, and victims of domestic violence.

    The effect of the tax on Michigan businesses, including law offices, is also significant. Moving legal and other professional services across state lines can be accomplished with a few computer keystrokes. Not surprisingly, service taxes imposed in Florida and Massachusetts were quickly repealed because of boycotts and threats of business relocations.

    Legal services are an ordinary and necessary part of doing business. High-tech firms wishing to locate or expand in Michigan to serve businesses needing their legal expertise may choose locations in other states rather than deal with the tax, leaving Michigan businesses with fewer choices. Firms, especially small ones that cannot afford to hire in-house counsel, rely on legal services for copyright, patent, or trademark protection, hiring and contract negotiation, and growth and expansion.

    While we recognize that Michigan needs to balance its budget, doing it on the backs of those who can least afford it is poor public policy. We urge the governor and Legislature to consider the long-term negative impact on the state's economy and quality of life, and scrap the "misery tax" on Michigan residents.

    Center Line attorney Kimberly M. Cahill is the president of the State Bar of Michigan.



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