MIDLAND — A widely used economic modeling program shows that delaying the scheduled cut in Michigan’s income tax, as reportedly contemplated by Gov. Granholm and state legislators, would thwart the creation of as many as 2,948 jobs in 2004, according to the Mackinac Center for Public Policy, which also uses the model.

The State Tax Analysis Modeling Program (STAMP), produced by the Beacon Hill Institute for Public Policy Research at Suffolk University in Boston, is used to analyze the impact of state tax policy on jobs in states as diverse as California, Ohio, and Virginia, and by the state government of Oklahoma. The Mackinac Center owns and operates a STAMP model tailored to the state of Michigan in order to study the economic impact of changes in Michigan’s tax structure. Michigan’s income tax is scheduled to be cut from 4.0 percent to 3.9 percent, effective Jan. 1, 2004.

The STAMP model used by the Mackinac Center also calculates that the business services industries would be hit hardest by a delay in the scheduled income tax cut, with more than 600 jobs not created in that sector. This forecast comes on the heels of state Senate Fiscal Agency testimony that 23.3 percent of all job losses in the United States since 2001 have come from one state — Michigan.

"You don’t treat a bleeding patient by opening another vein," said Michael LaFaive, director of fiscal policy for the Mackinac Center. "The state of Michigan can’t afford not to cut taxes. We’re bleeding jobs. The prescription is lower state spending and management techniques such as privatization," LaFaive said. The Mackinac Center is a nonprofit, nonpartisan research and educational institute.

Last March, the Mackinac Center published a 157-page study, "Recommendations to Strengthen Civil Society and Balance Michigan’s State Budget," offering more than $2 billion in General Fund savings. "The first round of budget cuts this year were impressive, but more can certainly be done," said LaFaive. The study is online at http://www.mackinac.org/5046.

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