Tuesday, December 29, 2009

Granholm's Tax Warning

More "Wing Nut" Right PropagandaEditor's Note: Kathleen's words, not the editor's.

The only business growing in Michigan, is Government.

Californians, take notice of who is ruining, oops, I mean running the biz, Democrats. I know, I know, it's Bush's fault, he would not give them a bailout. 
Submitted by Kathleen Rogan

Wall Street Journal Editorial
May 28, 2008

It's no fun to kick a state when it's down – especially when the local politicians are doing a fine job of it – but the latest news of Michigan's deepening budget woe is a national warning of what happens when you raise taxes in a weak economy.

Officials in Lansing reported this month that the state faces a revenue shortfall between $350 million and $550 million next budget year. This is a major embarrassment for Governor Jennifer Granholm, the second-term Democrat who shut down the state government last year until the Legislature approved Michigan's biggest tax hike in a generation. Her tax plan raised the state income tax rate to 4.35% from 3.9%, and increased the state's tax on gross business receipts by 22%. Ms. Granholm argued that these new taxes would raise some $1.3 billion in new revenue that could be "invested" in social spending and new businesses and lead to a Michigan renaissance.

Not quite. Six months later one-third of the expected revenues have vanished as the state's economy continues to struggle. Income tax collections are falling behind estimates, as are property tax receipts and those from the state's transaction tax on home sales.

Michigan is now in the 18th month of a state-wide recession, and the unemployment rate of 6.9% remains far above the national rate of 5%. Ms. Granholm blames the nationwide mortgage meltdown and higher energy prices for the job losses and disappearing revenues, but this Great Lakes state is in its own unique hole. Nearby Illinois (5.4% jobless rate) and even Ohio (5.6%) are doing better.

Leon Drolet, the head of the Michigan Taxpayers Alliance, complains that "we are witnessing the Detroit-ification of Michigan." By that he means that the same high tax and spend policies that have hollowed out the Motor City are now infecting many other areas of the state.

The tax hikes have done nothing but accelerate the departures of families and businesses. Michigan ranks fourth of the 50 states in declining home values, and these days about two families leave for every family that moves in. Making matters worse is that property taxes are continuing to rise by the rate of overall inflation, while home values fall. Michigan natives grumble that the only reason more people aren't blazing a path out of the state is they can't sell their homes. Research by former Comerica economist David Littmann finds that about the only industry still growing in Michigan is government. Ms. Granholm's $44.8 billion budget this year further fattened agency payrolls.

There's another national lesson from the Granholm tax dud. If Democrats believe that anger over the economy and high gas prices have put voters in a receptive mood for higher taxes, they should visit the Wolverine State.

Just a few weeks ago taxpayer advocates collected enough signatures in suburban Detroit for a ballot initiative to recall powerful Speaker of the House Andy Dillon, who was one of last year's tax-hike ringleaders. Voters seem to think there would be rough justice if for once politicians, rather than workers, lose their jobs from higher taxes.


Lionel Emde said...

Two problems with this editorial:
1. It's grossly out-of-date. (May 2008) The unemployment rate is 15+% in Michigan now!

2.Nowhere in the edtorial does WSJ mention a main reason for the job losses, and that is the loss of manufacturing--you know, good blue-collar type jobs. That fits with WSJ's endless promotion of "free trade", and the shipping of our jobs overseas, which they and their Wall St. buddies love.

Kathleen Rogan said...

You will never be able to stop free trade, ever. Americans will revolt.

When was the last time you bought anything that was American Made? I wanted to buy a fake Christmas Tree that was made in America and it was $1,000.00. Yes, that tired old saying, 'the shipping of our jobs overseas' is old and tired.
Even Americans are moving out of America and the entitlement seekers are moving into America.

You need to study supply and demand. The demand is there, how do you supply the demand? Go overseas, I don't blame business one bit. I prefer it, cheaper for me. All of my liberal democratic friends shop in Wal-Mart and buy non-union vehicles. Gotta love those cheap prices. You can't stop free trade, ever. Americans won't stand for over priced crap. Just look at Detroit. Prez is giving them more bail out money at the pricey tune of 6 billion. Chrysler does not even have any new cars to show in the Big Auto Show coming to Detroit but, they will have the taxpayer funded money for their paychecks and bloated pensions. Pelosi will be at the Detroit Auto Show with her entourage.

Democrats; will force Americans to continue funding failed projects just to keep jobs for the masses=high taxes for Americans.

Private Sector; closes the door when they fail=opportunities for other upstarts with a better idea.

I will chooses the Private Sector any day. Better for my wallet.

Anonymous said...

News for Kathleen Rogan: Free trade is an abstract idea that doesn't exist in practice. We can't stop free trade because we never started it.

Kathleen Rogan said...

Like I said, you can't stop free trade. You may not be aware of it, but it will go on forever.