Mackinac Center Fiscal Director: Governors Tax Hike Proposal Is Madness

Total proposed spending for next year is $2.1 billion higher than current fiscal year’s budget

MIDLAND — Michael D. LaFaive, the Mackinac Center’s director of fiscal policy, today characterized Gov. Granholm’s proposal to impose a $554 million tax hike as “one last sop to Lansing politicians, their lieutenants and government employee unions.” The governor argues that her proposed tax system will become revenue-neutral after 2013, but LaFaive observed, “Revenue-neutral or not, lawmakers should not be restructuring the state’s tax system before adopting significant spending reforms — reforms more fundamental than the half-hearted measures the governor has proposed so far.

“The governor is calling in tax architects while Michigan’s house burns down,” LaFaive added. “Michigan’s per-capita personal income is already 13.1 percent below the national average. The governor’s tax hike proposal is madness, and it will only make us poorer still.” LaFaive also noted that Michigan Senate Fiscal Agency figures show that under the governor’s plan, the adjusted gross total appropriation for fiscal 2011 would be $2.1 billion higher than for fiscal 2010.

LaFaive and Mackinac Center Adjunct Scholar James Porterfield recently estimated that the state could achieve at least $557 million in first-year savings by enrolling state and public school employees in insurance plans based on health savings accounts. The projected total savings from this shift would grow to almost $32 billion through 2021.

LaFaive added: “Michigan lawmakers hit Michigan with a 2007 tax hike worth $1.4 billion, and already they want more? This has less to do with helping the people of Michigan and more to do with sparing lawmakers the really tough decisions that many Michigan households have already had to make.”

Mackinac Center analysts will be responding to other components of the governor’s tax and budget proposals on the Center’s blog, “The MC.” Center Fiscal Policy Analyst James Hohman has already posted entries titled “Governor Wrong About Headlee Limits” and “Governor’s Tax Hike Proposals Increase Already Juiced System.”

The Mackinac Center is a free-market research and educational institute headquartered in Midland, Mich.

4 comments for “Mackinac Center Fiscal Director: Governors Tax Hike Proposal Is Madness

  1. February 12, 2010 at 9:43 am

    Jason, as you know we went through this last year. In September, I put this together:

    You will find that eerily familiar.

  2. jgillman
    February 12, 2010 at 10:42 am


    Your “rainy day” comment quite astute as usual.. Its the ol “living beyond the means” scenario of course, and because it is done by politicians shooting the wad as you put it, it affects us all.

    On a side note:

    I am a supporter of the Fair Tax, which also has service tax inclusion, but then has constitutional limits on changes in the revenue code to be approved by the voters. It eliminates a number of business based tax policies, and would simplify life for small business owners.

    Ill tell you, it would be really cool to know that if I had limited money, my whole attention could be to buying only when necessary, instead of worrying about punitive measures based on my inability to please a government bureaucrat because I fill out a form wrong.

  3. Bruce Barlond
    February 13, 2010 at 9:10 pm

    Has she no shame! When will any of these overly educated nerds realize that there are simple answers out there to most problems, including these. Don’t they understand that they don’t have to ‘re-invent’ Michigan, they need to get Michigan working again instead of sitting around, hoping for change. The State must get people working again making things that people here and around the world want to buy for a price that people here and around the world want to pay. It isn’t hard, Michigan already has the infrastructure and skilled labor to do the job. There are plenty of empty factories and industrial land available for purchase a decent price. Michigan just needs to reduce the cost of doing business in Michigan so that Michigans’ skilled people can go to work doing what they do best, building things. Now, will it be easy? NO! Will there be no pain? No! Will it work? Yes! Will Michiganians, Michigan and America be better off? Yes! Yes! Yes!

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