Thank you Sir! May I have another?

The paddling scene from Animal House comes to mind. While the movie is not virtuous, that scene seems apropos. It seems that the Governor and Legislature, after passing a capricious and poorly-thought-out tax increase, have bent us over the desk and are administering the paddle to us, the taxpayers.

According to the Detroit Free Press, the state budget will increase by $760 million, not decrease by $400 million as promised. It seems that the "cuts" were from next year's projections, not from real spending. It's akin to the 50% off sale at the furniture store. 50% off of an inflated number still leaves a profit. Cuts from an inflated budget projection still lead to more spending, while picking our pockets for more taxes.

Personally I am getting tired of taking the paddling from the politicians. Isn't there an election coming up?

Welcome to a Third-World state

The Wall Street Journal said it pretty well. We are on our way to taxing our way to prosperity.

Hail to the Taxers
October 2, 2007

Actor Jeff Daniels makes a cool pitchman in those national TV spots inviting business to Michigan, but soon he may have to start pitching *inside* the state. At about 2 a.m. Monday, a handful of Republicans in the Legislature broke days of gridlock and handed Democratic Governor Jennifer Granholm the $1.48 billion tax increase she has been demanding.

The state's personal income tax will rise to 4.35% from 3.9%, and the rest of the revenue grab will come from a new 6% sales tax on business services. Already 14th in tax burden among the 50 states, according to the Tax Foundation, Michigan is now headed up in the rankings. Congratulations.

The Michigan Chamber of Commerce estimates that two-thirds of the $750 million in new sales tax revenue will apply to business transactions that are tax exempt in most states to avoid a compounding effect that raises costs to final consumers. The tax is especially unfair to small employers that contract out for activities, such as office services, that large businesses provide in-house with no sales tax applied. By the way, last year Michigan introduced a new 4.95% business income tax, which will be applied on top of the sales tax.

Last year, amid the national expansion, Michigan was the only state outside the Gulf Coast to lose jobs and see a decline in economic output. Comerica Bank recently moved its headquarters to Texas, in part because of Michigan's hostile business climate. Michigan's 7.4% jobless rate is the highest of all states and far above the 4.6% national rate.

The state is suffering from the decline of Detroit's car makers, but that's all the more reason to promote policies that attract new businesses -- or at least don't drive current employers to Florida. Ms. Granholm argues that the combination of new taxes to balance the budget, and to finance such new public "investment" as job retraining and education, will reinvigorate Michigan.

She should check her history books. In the past 25 years, the only period when Michigan's growth has exceeded that of the national economy was in the mid-1990s after then-Governor John Engler's tax cutting and welfare reform. For a time, Michigan became the unlikely national leader in job creation. Now the total tax burden is returning to where it was before the Engler years.

Michigan last went on a taxing binge in 1983, and voters were outraged enough to mount a successful recall campaign against two state Senate ringleaders. This time, two of three Michigan voters have told pollsters they want budget cuts, not new taxes. It may be that the only way to get jobs back into Michigan is to make sure the taxing politicians in Lansing lose theirs.

Watching a slow-motion train wreck

Due to the utter incompetence of our elected officials in the once-great state of Michigan, our state government will shut down on Sunday at midnight. They have known about the $1.75 billion hole in the budget for most of the year if not longer. But rather than deal with the elephant in the room, they have chosen to engage in a months-long kabuki theater of the absurd. Just for fun, I have links below to some of the local newspaper commentary on the mess that is Lansing. Michigan is the Titanic, and they are the band.

Governor Jenn Jenn issues 35000 layoff notices

Foolish Politics ruins state editorial

Casinos can stay open Yippee!

Day of Reckoning? Hardly

Be grateful if you live somewhere else. The Banana Republic of Michigan is going dark this Monday morning.

Living in Denial

The Michigan Legislature and Governor have figured out a way to erect a Potemkin Village for the state's ongoing budget crisis. Here is one example of their fine work. For a state that takes great pains to make sure that everyone knows about the water recreation available here, they decide that budgetary smoke and mirrors are a better use of the fund for cleaning up leaking underground fuel tanks.
Speaking of smoke, this is a beauty. The money that was supposed to be used to get people, especially kids, to stop smoking has been sold off too. All because they don't want to face the reality that the world as they knew it is gone. The state has serious economic problems, and they are rearranging the deck chairs on the Titanic. This is the best government that money can buy?