Snyder is working with Jennifer Granholm on the selection of MEDC guys.. YAWN. Another appointment of people to spend your money by picking ponies.
This hardly comes as any surprise. The giant roulette table known as Michigan’s economy has state (taxpayer) dollars spread all over it. Seems like they might pick a winner one of these days. [cue loser song here]
Things are gonna change.. I can feel it. Right.
Roger Buchholtz, President of the Michigan FairTax Association (MFTA), commented that “Michigan’s current income and corporate tax system leaves Michigan with no alternative for business promotion but to grant to agencies, such as the MEDC, the central planning function of picking which businesses are to receive tax favors to recruit them to come to or stay in Michigan.” This practice of picking winners and losers is fraught with pitfalls.
Buchholtz said, “Past performance of even the most well intentioned appointees to such central planning bodies in Michigan and around the world demonstrates clearly that market soothsaying achieves at best, only limited success and at worst, failure of the state.”
It is not the effectiveness of tax abatement or reduction that has failed to change business location and expansion decisions; it is the inability to predict the market that has too often failed. The major problem with the practice of picking winners and losers is that more often than not the central planners are wrong. They choose the wrong industry or company and the tax dollars are wasted.
Buchholtz pointed out “Another problem with giving one business in an industry a tax favor is that the other businesses in the state in that industry are placed at a competitive disadvantage. Our free enterprise system depends upon the free exchange of goods and services and when this is interrupted by government intervention a less than optimal allocation of goods and services results, to the detriment of our standard of living.”
Ron Babin, Vice president of MFTA pointed out that “A non-economic effect of such government central planning is that it is a usurpation of the power of citizens in the marketplace. The diverse power of citizens making economic choices via their purchases is replaced by the concentrated power of government central planners. This, in turn, lends itself to the corrupting power of selling tax favors to those lobbying to obtain them and further erodes our representative form of government.”
Buchholtz and Babin pointed out that there is an alternative to the state picking winners and losers to promote businesses in Michigan. It is a simple proposal to virtually untax ALL Michigan businesses and to eliminate the ruse that businesses pay taxes. Michigan business taxes today are added to the price of Michigan produced products and make Michigan labor and businesses less competitive.
They pointed out that if partial and temporary tax abatements to a few businesses will create jobs in Michigan, just imagine the jobs created by full and permanent tax abatement for all Michigan businesses. That is the MI FairTax solution. If there is a better plan let’s see it. More information about the MI FairTax proposal is at www.mifairtax.org.