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Michigan Just Doesn’t Get It

1 min readBy: Curtis S. Dubay

Michigan out 28,000 jobs

Aug. 7.4% jobless rate is 14-year high; auto, construction work shrinks

That is the headline of an article in today’s Detroit News. With their economy in shambles, Michigan lawmakers, spurred on by the governor, are currently working to raise taxes!

It is baffling that during a time of such economic hardship Michigan could actually increase taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es, but maybe such thinking is what got them in this mess in the first place.

Michigan is suffering in isolation as the rest of the nation is growing, from the Detroit News article:

Since August 2006, employment in Michigan has dropped by 2 percent, even while the national rate of employment increased by 0.8 percent.

Michigan’s economic troubles stem largely from its reliance on the automotive industry and the only way Michigan will recover is by attracting new businesses. Raising taxes and having an inhospitable business tax climate will not spur new investment in the state.

The governor and legislature would better serve the state by biting the bullet on spending, leaving the income and sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. es alone– since they are among the best systems in the nation– and lowering other taxes to make Michigan a more friendly place to do business.

See our State Business Tax Climate Index to learn more about Michigan’s tax system.