Michigan Committing Economic Suicide?
"The only good news from Maryland and Michigan (both raised taxes) is that these states will serve as laboratories for economic failure. In upcoming years, public policy experts will compare their economic performance to the results in states — like Rhode Island and New Mexico — that have lowered tax rates. Needless to say, it is easy to predict that the states lowering tax rates will prosper relative to the states that are increasing the burden of government."
Read the full article here from Cato.
4 Comments:
This isn't about states; It's about Democrats. It isn't suicide; It's murder.
When Governor Engler signed into law over 30 tax cuts during his administration, he ran out the door and left the Michigan mess on Governor Granholm doorstep. The present governor did not create the mess that Michigan is in now. I must also concede that she not helped much either.
If 30 tax cuts in a row did not help the state, maybe another 30 tax cuts should do it. Where does it stop?
Michigan was stabbed many times before the current administration took office. Without some blood transfusions, the patient is going to die.
Republicans and Democrats are equally to blame in this mess. For the last several years a budget with a major structural deficit has been patched up with one time fixes like the raiding of tobacco settlement funds and earlier collection of property taxes. The legislature finally ran out of time to make hard decisions, and slapped together this plan at the 11th...(or was it the 12th?) hour. Nice job, boneheads.
In the 1997-1998 budget year, Michigan's budget was $31.472B.
In the 2007-2008 budget year, the budget was estimated to be $42.599B.
This is an increase of $11.127B [35%], or 3.1% annually.
Inflation during this period was 2.60% (using BLS CPI).
So state government spending has increased almost 20% faster than inflation.
This spending increase occurred while total state employment dropped from 61,493 in 2000, near the end of Engler's 12 years as governor, to 52,259 in 2006, under Granholm. [figures are from the Detroit Free Press]
So employment drops 15%, but spending increased 35%.
Tax cuts didn't decrease the flow of money to Lansing.
As always, it's not the income, it's the spending.
No matter what the tax rates are; no matter how much money goes to Lansing; it's never enough.
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