For Immediate Release
Tuesday, June 15, 2010
Fiscal Policy Director
Senior Director of Communications
MIDLAND — Gov. Jennifer Granholm's tax
hike proposal would cost as many as 30,000 Michigan jobs in the first year,
according to research conducted by analysts at the Mackinac Center for Public
Policy and the Beacon Hill Institute in Boston. The model, developed to measure
the impact of tax increases or decreases in Michigan, showed that the tax
proposal would also produce a $264 million drop in total investment in the
state in the first year.
"The model told us what
should be obvious to even casual observers: raising taxes destroys jobs and
wealth, while cutting taxes creates jobs and wealth," said Michael LaFaive,
director of the Morey Fiscal Policy Initiative at the Mackinac Center. "While
Gov. Granholm and legislators seem to understand that tax cuts produce growth,
they cannot bring themselves to apply relief to everyone equally."
Using data from Gov.
Granholm's proposal, the State Tax Analysis Modeling Program — better known as
STAMP — projected that the nearly 30,000 jobs would be destroyed through fiscal
2011, and then moderate to 13,500 lost jobs through 2014, assuming that
proposed tax cuts take effect.
"The state's insatiable
appetite for revenue is driving job losses in Michigan," LaFaive added. "How
much more can beleaguered taxpayers and workers take?"
The Granholm plan would
lower the sales tax rate to 5.5 percent and expand it to services, raising $554
million in the first year. In 2012 and 2013, tax cuts would purportedly be
phased in to make the hike revenue neutral. The total new net tax hike would
eclipse $940 million.
"The governor's latest
proposition will add to our tax burden, accelerate Michigan's trajectory toward greater
private-sector unemployment, increase Michigan's overall poverty relative to
the nation, and, most significantly, fail to address our real problem:
state government's out-of-control spending compared with the imploding
private-sector tax base," said David Littmann, Mackinac Center senior
"The real tax burden on any
economy is government spending," Littmann added. "This has not been addressed.
The proposal at hand will increase incentives to maintain growth in government
relative to the size of Michigan's private sector — an entirely
unacceptable and predictable economic outcome."
For more information on the
impact of Gov. Granholm's tax hike proposal,
see Michael LaFaive's new essay, "Tax
Hikes Kill Jobs, Tax Cuts Create Them."