Sunday, March 13, 2011

Detroit News lays out how Rick Snyder can fail

If Governor Snyder's budget/plan does not attract new jobs to Michigan (as opposed to merely creating jobs out of whole cloth, which the IRS can do without a problem), it fails entirely.

Adding jobs to reduce Michigan's 10.1 percent unemployment rate — that's the official rate; the real number is likely much higher — is as crucial a priority as providing a quality education, maintaining roads, manning prisons or any other function of state government... fixing Michigan's anti-business tax structure is the only way to create jobs. Jobs are the only hope Michigan has of growing itself out of this hole. Every job created means more tax revenue to sustain all those other programs. It's that simple.
Right now, Michigan is creating too few jobs. A major reason is that the business tax burden is too high, and the Michigan Business Tax is too complex.
Michigan ranks 48th in the complexity of its business tax code, and 38th in overall business tax burden, according to the Tax Foundation. None of the state's assets will offset such an unfavorable tax climate.
Snyder's plan would move Michigan to 16th on the list of states with the lowest business taxes.
The current code is particularly harsh on small businesses, which ended up being double taxed because they pay both the MBT and the personal income tax.
The Small Business Association of Michigan ran Snyder's proposal to tax corporations at a rate of 6 percent of income and small business at the individual income tax rate past its members and received an enthusiastic response. Forty-eight percent said they would add more jobs if the plan passes; 52 percent said they would expand their business; and 51 percent said they would buy new equipment.
Half said they would raise the wages and benefits of employees.
Larger companies also believe the new tax rate would stir growth. Business Leaders of Michigan polled its members and one-third say it would encourage more hiring.
What that means is that the plan shouldn't be viewed as a tax break for business as much as a bailout for Michigan's beleaguered workers in the form of more jobs and better pay.
Compliance costs also drop markedly under the simplified tax code, since more than 95,000 businesses will no longer have to file a business tax return. That will free even more money to grow businesses.
Michigan has very little going for it when seeking new jobs and investment, which is why it has had to rely so heavily on tax credits and incentives to lure businesses.

Mind you, the state government's mandate to reduce unemployment is merely an effect of any government's true mandate: to guard and protect the conditions necessary for citizens to create prosperity.

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