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%.
You know what the Guv outta consider. How about some more tax increases? That ought to fix things right up.
Hat Tip TaxProf.
5 comments:
Hell, why haven't they abandoned all pretense and just take it all. Then they could model the economy just the way they like it; like say China, they seem to be doing OK.
I dont know when Michigan will learn. They just keep electing democrats and it gets worse and worse for them.
And their football team sucks too.
Detroit used to be the economic gem of this country. Then in the 60's the flaming libs got their grubby little fingers on the money pot and it has gone down hill ever since. Probably 90% of their economy has literally been chased out by the Democrats. If the people of Michigan don't see the damage done by liberalism by now, they never will.
What aggravates me the most. People refuse to look at a state like Michigan to see what "progressive" leadership does to a community, a state, and a country.
We're going to find out real quick.
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