II. Revenue Estimates

The revenue projections were generated by an economic model developed by the author for the Mackinac Center for Public Policy. The model differs from the standard. "static" models commonly used in government agencies in that it attempts to estimate the actual, dynamic behavior of individuals when confronted by changes in tax rates. This dynamic behavior is reflected in changes in the value of property, the avoidance of laws, voter approval or rejection of millage rates, and the partial capture by other taxes of additional disposable income from a cut in the property tax. The model is discussed in detail in Appendix III, on page 37.

This study takes a skeptical view of additional tax relief contained in other bills, but not included in the amendment. In particular, it does not assume the enactment of SB 146, which would create a one-year delay in assessment increases starting in 1994. It does include a "double rollback" in 1993, as discussed on page 11, because it is required under current law.