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Outside the Beltway: Michigan Teaches the Lessons of Tax and Spend Progressivism

Posted By Mike Brownfield On October 20, 2009 @ 8:49 am In Economics | Comments Disabled

While Time Magazine has set up shop in Detroit to chronicle the continuing decay of one of America’s great industrial cities, the Wall Street Journal has found a teachable moment [1] 90 miles northwest in Michigan’s capital city: government cannot tax and spend its way out of deficits and joblessness.

As the Wall Street Journal reports, Michigan’s 15.2% unemployment rate is the worst in the country, with the state having lost 750,000 jobs since 2000. Shockingly, since 2007, two families move out of Michigan for every one family that moves in. Oppressive taxation and out of control spending just might have something to do with it. From the WSJ:

In 2007 Governor Jennifer Granholm signed the biggest tax increase in Michigan history, with most of the $1.4 billion coming from business. The personal income tax—which hits nonincorporated small businesses—was raised to 4.2% from 3.95%, and the Michigan business tax levied a surcharge of 22%. The tax money was dedicated to the likes of education, public works, job retraining and corporate subsidies. Ms. Granholm and her union allies called these “investments,” and the exercise was widely applauded as a prototype of “progressive” budgeting.

The result of the “progressive” budgeting is evident across the state. Aside for soaring unemployment, businesses are shutting doors, homes are falling into foreclosure, and property values have plummeted. Now, as the WSJ reports, Michigan is facing a $1 billion shortfall in projected income (despite higher taxes), skyrocketing deficits and even more taxes, possibly to the tune of $600 million. And this in a state that has received $120 million in federal stimulus funds which have created, so far, a whopping 397 jobs [2]. That’s $300,000 per job.

Businessman Steve Wynn, who recently appeared on Fox News Sunday with Granholm, might have summarized this lesson in governance best when he boldly proclaimed, “Government has never increased the standard of living of one single human being in civilization’s history.” Watch:

[youtube]http://www.youtube.com/watch?v=T7cW9ujow5E[/youtube]


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/10/20/outside-the-beltway-michigan-teaches-the-lessons-of-tax-and-spend-progressivism/

URLs in this post:

[1] the Wall Street Journal has found a teachable moment: http://online.wsj.com/article/SB10001424052748704322004574477363965641226.html

[2] $120 million in federal stimulus funds which have created, so far, a whopping 397 jobs: http://www.mlive.com/michigan-job-search/index.ssf/2009/10/in_michigan_120m_in_stimulus_spending_so.html

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