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Adam
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Found by http://mjperry.blogspot.com/2008/05/if-you-tax-something-you-get-less-of-it.html
http://online.wsj.com/article/SB121192942396124327.html?mod=todays_us_opinion
Granholm's Tax Warning
May 28, 2008;
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%. Ms. Granholm blames the nationwide mortgage meltdown and higher energy prices for the job losses and disappearing revenues, but this Great Lakes state is in its own unique hole. Nearby Illinois (5.4% jobless rate) and even Ohio (5.6%) are doing better.
Leon Drolet, the head of the Michigan Taxpayers Alliance, complains that "we are witnessing the Detroit-ification of Michigan." By that he means that the same high tax and spend policies that have hollowed out the Motor City are now infecting many other areas of the state.
The tax hikes have done nothing but accelerate the departures of families and businesses. Michigan ranks fourth of the 50 states in declining home values, and these days about two families leave for every family that moves in. Making matters worse is that property taxes are continuing to rise by the rate of overall inflation, while home values fall. Michigan natives grumble that the only reason more people aren't blazing a path out of the state is they can't sell their homes. Research by former Comerica economist David Littmann finds that about the only industry still growing in Michigan is government. Ms. Granholm's $44.8 billion budget this year further fattened agency payrolls.
There's another national lesson from the Granholm tax dud. If Democrats believe that anger over the economy and high gas prices have put voters in a receptive mood for higher taxes, they should visit the Wolverine State.
Just a few weeks ago taxpayer advocates collected enough signatures in suburban Detroit for a ballot initiative to recall powerful Speaker of the House Andy Dillon, who was one of last year's tax-hike ringleaders. Voters seem to think there would be rough justice if for once politicians, rather than workers, lose their jobs from higher taxes. |
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Wed May 28, 2008 11:30 am |
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Public D
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http://thefaithfulpenguin.blogspot.com/2008/05/how-to-lie-for-your-ideology-wall.html
How to lie for your ideology - Wall Street Journal Style
So, I'm reading the WSJ opinion page this morning (though I rarely do) and run into this typcial lib-nut warning about the evils of taxation:
"Granholm's Tax Warning
May 28, 2008; Page A16
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."
A libertarian chestnut based on a gold-standard economy that really doesn't bear scrutiny in today's world. When the government takes through taxation, it doesn't shred the money or put in a vault somewhere, permanently reducing the money supply like the Kings of Old.
Rather it takes a certain amount of money, let's say $100, and uses that money to buy goods and services which, in long-term break-even spending, will equal the intake. In this case $100. Had the person taxed $100 kept his $100, in the long run what would happen? He'd buy $100 in goods and services.
Yes, there are short-run differences. Both States and individuals save. Both States and individuals deficit spend. In the long-run though, there is no difference to the economy if the government or an individual buys $100 of goods and services.
"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."
Right because something important has happened in the economy. But you're not going to us this, are you?
Of course not. You have an ideology you need to spread, like a virus, because you've got something at stake: a high income you want to protect and an inability to see that income is part of an interrelated whole we call "society" and "civilization." One where, if run by selfish bastards, ends up with a gilded age of a few very rich and most everyone else in crushing, hopeless poverty.
"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%. Ms. Granholm blames the nationwide mortgage meltdown and higher energy prices for the job losses and disappearing revenues, but this Great Lakes state is in its own unique hole. Nearby Illinois (5.4% jobless rate) and even Ohio (5.6%) are doing better."
Well, you add more "fun facts" to the table but where's the argument...
"Leon Drolet, the head of the Michigan Taxpayers Alliance, complains that "we are witnessing the Detroit-ification of Michigan." By that he means that the same high tax and spend policies that have hollowed out the Motor City are now infecting many other areas of the state.
The tax hikes have done nothing but accelerate the departures of families and businesses. Michigan ranks fourth of the 50 states in declining home values, and these days about two families leave for every family that moves in. Making matters worse is that property taxes are continuing to rise by the rate of overall inflation, while home values fall. Michigan natives grumble that the only reason more people aren't blazing a path out of the state is they can't sell their homes. Research by former Comerica economist David Littmann finds that about the only industry still growing in Michigan is government. Ms. Granholm's $44.8 billion budget this year further fattened agency payrolls."
Okay. Lots of coded rhetoric. But still no facts, no data, just whining and crying. And some unintentional irony, if the State "fattened payrolls" that means someone is making money. Or did this escape his notice? And how is this a bad thing?
Does he not understand what these people do with the money they get from their jobs? Here's a clue: they buy goods and services. In fact, unlike the rich who would tend to save the money where it would do no good to the economy (just get tied up in circulation in the stock market) this money will tend to be spent, generating MORE goods and services. Which is why Bush sent out the welfare checks in a classic Keynesian stimulus package. To get money into people's hands that are more likely to spend it on goods and services to jump-start the lagging economy that, by itself, lacks the robustness to stimulate itself.
"There's another national lesson from the Granholm tax dud. If Democrats believe that anger over the economy and high gas prices have put voters in a receptive mood for higher taxes, they should visit the Wolverine State.
Just a few weeks ago taxpayer advocates collected enough signatures in suburban Detroit for a ballot initiative to recall powerful Speaker of the House Andy Dillon, who was one of last year's tax-hike ringleaders. Voters seem to think there would be rough justice if for once politicians, rather than workers, lose their jobs from higher taxes.
If there is a lesson to be learned, the lesson is that the Rich engage in class warfare with concepts the average person doesn't understand. Lacking understanding, these individuals can't see they're being taken for a ride."
Now, do you want to know why Michigan is in trouble? The REAL reason? According to the FEDERAL RESERVE BANK OF CHICAGO (written in 2005) the hand-writing was on the wall:
"The economies of both states are automotive intensive, but Michigan to an even greater degree. Indiana’s automotive share dominates manufacturing inside the state, at 16%. But Michigan’s automotive sector accounts for 35% of its manufacturing employment. A weakening automotive sector, then, would be felt more sharply in Michigan.
On top this, the auto sector’s performance in Michigan has been worse. From 2001 to date, automotive jobs have fallen 24% in Michigan, compared to 8% in Indiana.
Indiana’s automotive performance is buffered by having a larger share of foreign auto parts and auto assembly plants than Michigan. According to senior economist Thomas Klier, 29% of automotive parts plants in Indiana are foreign owned, as are 2 of its 3 auto assembly plants."
Essentially, Michigan has too much auto manufacturing and too many of them are American companies instead of foreign. And thus, sober, clean economic analysis based on facts by someone who wants to understand what's going on tells us the TRUTH of Michigan then, and paints a future of what could happen in Michigan.
Classic science verses religion understanding. Empirical evidence, rigorous modeling, paying attention to factors that are causal making testable predictions versus "taxes is EVIL rhetoric"that fails to note we've had tax hikes in bad-times before and they've done no harm.
The embarrassingly inept and dishonest way this column is argued, btw, the reason I stopped subscribing to the WSJ in the 1980's. The WSJ reporting is first class, but doesn't really apply to me or my business model (sole-proprietor CPA) leaving me with its worthless opinion section. |
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Wed May 28, 2008 6:19 pm |
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david
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michigan economy has been in the tank for years yet the state re-elects their beloved govenor. why on earth would the state give her another 4 years? you can expect the same results as her first four.
no jobs, too many social programs and the tax base is gone. cut back on the social programs, legalize marijuana, tax it, control it, regulate it and bring the tax money into the coffers. use a percent of the tax for education and treatment.
i left michigan in 1968 but return often because my mother lives in flint and M.J. it seems is every where. what a potential to bring money into the state and before you state that people will grow their own, well i can't imagine there are many moonshine stills anymore.
think about it.
david,
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Wed May 28, 2008 7:04 pm |
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Flinn's Journal
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| Simple reason: Captain Amway would have been a much worse governor than Granholm. |
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I HAVE SEVERED MY TIES WITH FLINTTALK.COM BECAUSE TROLLS CANNOT BE CONTROLLED ON THIS BOARD. |
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Wed May 28, 2008 7:06 pm |
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david
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quote:
Flinn's Journal schreef:
Simple reason: Captain Amway would have been a much worse governor than Granholm.
interesting, so granholm was the lesser of two evils?
i know nothing of michigan politics but do know there is a real problem in flint and detroit metro area. i see the problem every year when i go back there to visit my mother. i sure hope things turn around in michigan as it really is a beautiful state but something needs to be done.
david,
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Wed May 28, 2008 7:40 pm |
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Flinn's Journal
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Wed May 28, 2008 7:43 pm |
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david
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Wed May 28, 2008 7:50 pm |
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andi03
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| If he solidly represents Amway's "familial ideals" than you don't want him in office.....<shudder> |
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Build a bridge and get over it! |
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Wed May 28, 2008 7:50 pm |
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david
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quote:
andi03 schreef:
If he solidly represents Amway's "familial ideals" than you don't want him in office.....<shudder>
familial ideals? well, all i know is that 4 years of jenny and michigan has the highest unemployment in the nation. so why go with a failed politician and a second term, why not try someone else for fresh ideas?
if you keep doing the same thing over and over then you can expect the same results.
not? |
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Wed May 28, 2008 8:02 pm |
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twotap
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Wed May 28, 2008 8:20 pm |
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Flinn's Journal
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quote:
david schreef:
quote:
andi03 schreef:
If he solidly represents Amway's "familial ideals" than you don't want him in office.....<shudder>
familial ideals? well, all i know is that 4 years of jenny and michigan has the highest unemployment in the nation. so why go with a failed politician and a second term, why not try someone else for fresh ideas?
if you keep doing the same thing over and over then you can expect the same results.
not?
http://liberalloudandproud.blogspot.com/2006/10/just-say-no-to-dick-and-yes-to-jen_30.html |
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I HAVE SEVERED MY TIES WITH FLINTTALK.COM BECAUSE TROLLS CANNOT BE CONTROLLED ON THIS BOARD. |
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Wed May 28, 2008 9:29 pm |
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