Tax Hikes Kill Jobs, Tax Cuts Create Them

By MICHAEL D. LAFAIVE | June 15, 2010

Fourteen percent of Michigan' labor force is unemployed. Thousands of others are underemployed or fear for their jobs. Yet a proposal by Gov. Jennifer Granholm for a net tax increase of $554 million in fiscal year 2011 would only exacerbate the problem, causing the loss of nearly 30,000 jobs in the first year alone, according to an economic modeling tool employed by Mackinac Center analysts. Just as bad, real disposable income would fall by $1.9 billion statewide. Wages would drop by more than $1,400 per person.

The tax increase, proposed last February, would raise more than $940 million in new revenues through 2014, according to the House Fiscal Agency. Offsetting provisions to eliminate the hated Michigan Business Tax surcharge and provide modest cuts in the Gross Receipts Tax would limit job losses to "just" 13,500 through 2014, according to the STAMP model (State Tax Analysis Modeling Program) done in conjunction with tax experts at the Beacon Hill Institute in Boston. This is the wrong tack to take with a state that has experienced a lost decade of economic growth. Instead, Michigan's Legislature should repudiate this proposal and immediately cut both state spending and taxes. FULL STORY