Peter Luke has a column out today that addresses the issue of the SBT and looks at the implications of not replacing the funding.
LANSING -- There's no free lunch when it comes to cutting business taxes in Michigan, and if the price tag requires slicing school and road funding, the state's economy would be worse off, according to a new analysis.
Timothy Bartik, senior economist for the W.E. Upjohn Institute for Employment Research, said Monday that Michigan's economy is in a deep rut because of the Michigan-based domestic auto industry's declining market share -- not because business taxes are too high. The institute is a nonpartisan economic policy group based in Kalamazoo.
While Republicans have seized on this summer's December 2007 repeal of the Single Business Tax as a way to move the state in a different direction, any tax savings to business would do more harm than good if lost tax revenue isn't replaced, Bartik said.
Upjohn is a non-partisan, non-profit agency that conducts research "into the cause and effects of unemployment and measures for the alleviation of unemployment". According to Tom Walsh in the DFP- they insist on publishing the full study, not just what the client wants to hear.
Bartik said the institute is nonpartisan, does not do proprietary research for clients and insists on publishing the results of all its work, even if the group funding the study disagrees with the outcome.
The report was financed equally between MEDC and Upjohn.
Looking to the Republican response- they cite a report from Patrick Anderson of the Anderson Economic Group.
Another study by Lansing economist Patrick Anderson for House Republicans insists that Michigan has to lower its tax burden to be a Top 10-state economically. Anderson's study said achieving that ranking, putting Michigan in line with high-growth states like Virginia and North Carolina, would require $2 billion in state and local business tax cuts.
How very convenient that eliminating the SBT would equal $2 billion dollars!
Mr. Anderson can hardly be considered a "non-partisan source". He is cited whenever the Republicans need an "expert" to back their slash and burn policies. Here is his biography at the Mackinac Center, his web pagewhen ran for the UM Board of Regents (endorsed by Right to Life and the Citizens for Traditional Values), and it seems he is available as a paid expert for your litigation needs.
We have a study being cited by Republicans that says $2 billion must go, but on the other hand we have DeVos saying he would replace a "majority" of the SBT revenue.
Which is it? DeVos won't say. From June-
Q . When you talk about restoring a majority of the tax, what are you talking about? Seventy, 80 percent of the revenue?
A . I haven't quantified that. I'm not going to get pinned down on a number.
Of course not. He won't release a plan until after the election. Act in haste, repent in leisure- but I doubt Dick would ever repent.
He also misrepresents Granholm's work on the SBT.
Q . Help us here then. Write the headline for us on the heart of this plan.
A . Eliminate the Single Business Tax.
Q . And ?
A . We'll deal with that. Let's eliminate it first. The governor has been governor for three and a half years and has yet to put a plan on the table to do anything.
Wrong. Either Dick is lying or he wasn't paying attention. Granholm released the "most sweeping restructuring of the SBT since its inception 30 years ago" back in March of 2005. We all know what happened to that. It was rejected because someone needed a campaign issue.
So, at this point, the Republican non-plan for the SBT varies from "eliminate it all" to "replace the majority". Doesn't quite instill confidence in business that wants to locate or expand here, does it?
The study concludes that high taxes are not to blame for Michigan's sluggish growth- the two ton giant that is the auto industry and those who depend on it are.
Bartik said Michigan is competitive on taxes, but is suffering economically because of its reliance on an auto industry undergoing painful restructuring. In a normal economic cycle, Michigan's economy should be proceeding along the same national pace.
Each of the tens of thousands of auto jobs lost since 2000, he said, means the loss of four other jobs throughout the Michigan economy as the result of a "rippling" effect.
At this point, any gains that we make can be wiped out in a second by the auto manufacturers. All the more reason to diversify our economy so we aren't at the mercy of one industry.
Tom Walsh has a succinct summary of the Upjohn study.
In the short-term, ride out the restructuring period in the domestic auto industry.
In the medium run, some business tax reforms that lower the tax on new investment without cutting key public services could be helpful.
And in the long run, that study said, Michigan must increase the skills of its workforce. That means boosting education attainment and making the state a more attractive place for college graduates to work.
We have no choice but to ride out the auto industry. Hang on tight.
Business tax reforms were stalled so DeVos could have an issue, hurting new investment by lowering our credit rating and putting new development in limbo. If not for the Republicans, they would have been completed last November.
And as far as education, Granholm has made that a key plank in her policy- increasing money for schools in next year's budget, increasing money for the Merit Scholarship, raising graduation requirements, and setting a goal of increasing the number of college graduates in Michigan.
I think we have discovered who has the better plan for Michigan. Quality of life and responsible fiscal policy are the keys to our future success.
DeVos and the Republicans offer neither.