NCPA - National Center for Policy Analysis


March 12, 2007

Michigan Governor Jennifer Granholm recently announced some $1 billion in new fees and tax increases that would charge Michigan residents higher levies for almost every activity inside the state, including trucking, shopping, smoking, hunting, fishing, using a cell phone and, yes, even dying, says the Wall Street Journal.

For instance:

  • The Governor wants to create a new corporate income tax as well as a new 2 percent excise tax on upwards of 100 business services
  • She'd also impose a 5 percent death tax on estates valued at more than $2 million -- which is a sure way to encourage more Michigan retirees to relocate.

The levies are part of what has become a vicious cycle of poor growth, lower revenues and increased taxes in Michigan.  The state has lost some 362,000 jobs since 2000 and the jobless rate in December was 7.1 percent, second highest in the country after Katrina-ravaged Mississippi's 7.5 percent.  The national rate is 4.6 percent.

But while the Governor says the taxes are essential to close an $860 million budget deficit, it hasn't stopped spending on special interests, says the Journal:

  • Her budget would increase spending by 2.2 percent and pay off teachers unions that support her; the state already spends a whopping $1,200 per student per year on teacher and administrator benefits.
  • According to the Governor's own Financial Advisory Panel, the state has amassed a $35 billion unfunded liability in its public-school health and retirement benefits.

It's true that some of Michigan's current woes are due to the movement of the U.S. auto makers -- and their unionized lack of competitiveness -- toward right-to-work states.  But that's all the more reason for Michigan to improve the business climate for other industries, though this is exactly the opposite of what Granholm plans, says the Journal.

Source: Editorial, "," Wall Street Journal, March 9, 2007.

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