Monday, July 23, 2007

Standing Down Wind

Let me see if I have this straight. Governor Granholm is going on a five day fishing trip to Sweden and Germany to catch jobs for Michigan. She is trying to get more automotive
and alternative energy business.

Her trip is being paid for by funds solicited by the Michigan Economic Development Corp. Foundation whose members are recipients of taxpayer money through corporate welfare from both the state and federal government. Having received this money, they are now financially able to make a contribution to pay for the governors trip along with between 6-25 people from the governor’s office.

The governor contends that the passage of the Michigan Business Tax, which replaces the Single Business Tax, is supposed to be revenue neutral and will now allow different businesses to pass the taxes down to the consumers (taxpayers). Added with the states’ 21st Century Jobs Fund it will ensure that “our tool kit is very robust”. She indicates that it will lure more business to Michigan. She will be looking for companies that will be eligible for more taxpayers dollars
through the Michigan Economic Growth Authority grants.

According to the University of Michiganfrom 2001 to 2005, Michigan lost 308,900 jobs. There have been tens of thousands lost since then. This will be the Governors fifth trip overseas and thus far it has netted us 2,300 jobs. It would seem to me that it would be more productive for the governor to stay home and fix the problems of overspending, poor management and high taxes that exists in the state than to go traipsing all over trying to bring a few more jobs here to Michigan.

To lure these businesses here they are usually offered a tax abatement. That means all or a portion of their property taxes will be forgotten for a period of time. This would mean that the cost of government services would be transferred to the remaining taxpayers. Let’s face it business moved to other states for a reason. If we fail to address those problems, we can not expect business from abroad or from other states to locate here.

In June of 2003 the Mackinac Center for Public Policy put out a report entitled “Does the Michigan Economic Development Corporation Even Matter?” In that document they indicated that economist consider the Gross State Product (the value of goods and services
produced) to be one of the better indicators of economic health.

Every state in the union has an economic development program. In 1996 Michigan ranked 9th (in the top ten) in per capita spending on economic developmentand 24th in GSP. Texas
was dead last in economic development per capita but had ranked 18th in GSP. In 2001 Michigan ranked 20th in economic development expendituresand 30th in GSP. California was 41 in economic development expenditures and 8th in per capita GSP. These were only a couple examples of the study.

Through “regression analysis” The Mackinac Center came to the conclusion that there is no correlation between state spending on economic developmentand GSP.

Economic Development Funds create jobs for those companies that receive them and loose jobs among their competitors by giving those who receive the fund an unfair advantage. The success
of a business should not be decided by the governor or legislature but by owner competence.

Rose Bogaert, Chair
Wayne County Taxpayers Association, Inc.

1 comment: said...


Best part of this nice little vacation the governor's going on is that the new MBT is supposed to help her attract new jobs?

The same MBT that raises taxes companies not HQ'd in the state?

Something tells me that's not necessarily the best marketing gimmick she could have come up with.

Great site. Keep up the good work!