(Editor’s Note: The following is excerpted and abridged from the text of a speech delivered by Michael LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center, to various groups around the state about the ballot proposals on the Nov. 6 ballot. We'll post one part each day this week explaining Proposals 1 through 5.)
Monday: Proposal 1 a Referendum on PA 4
Wednesday: Proposal 3 Would Cost Taxpayers Billions
Proposal 5 is arguably the most straightforward of all the proposals on the Nov. 6 ballot.
A "yes" vote would mandate that any vote to raise state taxes in Michigan be approved with a two-thirds vote of the Legislature. This supermajority mandate is commonly known as a Tax Limitation Amendment and some 17 states have them.
The idea behind a Tax Limitation Amendment is to make it more difficult for the political class to pilfer the pockets of taxpayers. Research — most notably by scholar Mancur Olson — has shown time and again that in democratic nations the wishes of an electorate are often ignored by narrow special interests that seek costly "favors" from the government. Politicians all too frequently accommodate those favors (be they subsidies or tariffs or spending hikes or other items) in part because their contributors and powerful constituents support them. Increasing taxes also is often a path of least resistance.
Constitutional restrictions are an effective way to handcuff politicians and stymie the special interests who lobby them for more money. Academic research on balance seems to show that such restrictions do check the growth of government and tax burdens, too.
Backers of the proposal — from the Michigan Alliance for Prosperity — have argued that tax burdens are 8 percent to 23 percent lower in states with such protections compared to those without.
Opponents argue that it should not be so difficult to raise taxes to fund important government services, but such an argument fails to consider cutting unnecessary spending. Do governments really need to continue providing hyper-generous fringe benefits to public employees?
In Michigan, the state does not need to raise taxes because there is plenty of room to cut without gutting programs or laying off employees. The Mackinac Center has long demonstrated more than $5 billion in possible savings from simply benchmarking public sector fringe benefit packages to private sector averages.
This proposal may not be perfect, but on net balance a yes vote would raise Michigan's taxpayer protections to a new level.
A "no" vote keeps the status quo intact.