Americans for Prosperity-Michigan

Granholm's 'no new taxes' pledge gets broken

Granholm’s ‘no new taxes’ pledge gets broken
Frank Beckmann          Detroit News

After all the talk out of Lansing about sympathy for the embattled pocketbooks of Michigan residents, it came as a cruel slap this week when Gov. Jennifer Granholm proposed a series of tax increases to balance the state’s budget.

The governor had “No new taxes and no new fees” in her State of the State address of 2008. In media appearances before and after that, she said “I’m not ever going to raise taxes again.” But her promises will once again be broken if this week’s proposals are enacted.

Just last week, in Troy, she said she is “not in favor of new taxes.” But this week she proposed just that in the form of a tax on entertainment tickets and some services, a new tax on bottled water and a 25-cent-per-pack increase on cigarettes.

Amazingly, in a WJR radio appearance Wednesday night, she said no increase in the 2-cent-a-can beer tax was sought because that’s the drink of choice for the “average Joe,” and she doesn’t want to unfairly burden whatever group that represents.

Does that mean water is the beverage of choice of only the wealthy?

We’re only two years removed from the biggest tax increase in Michigan history and an embarrassingly brief enactment of what would have been a devastating service tax.

Failing to learn any lessons from the aftermath, Granholm is showing a remarkable disconnect from the economic challenges of residents by asking Michiganians to pony up more than $1 billion more in taxes and tax credit reductions — which will make our state even less attractive to outside investors and existing businesses.

To her credit, Granholm seeks a three-year phase-out of the punitive Michigan Business Tax surcharge and seeks an overall cut of 12 percent in state spending, but her tax increase proposals come at the wrong time.

Noted economist Arthur Laffer released an Economic Competitive Index earlier this year, an assessment that placed Michigan dead last among the 50 states in economic performance based on non-farm payroll employment, outward migration of residents and per-capita personal income.

In the report’s economic outlook, Michigan ranked 34th overall, a spot earned primarily by the state’s ranking of 31st in the personal income tax rate, 41st in the corporate income tax rate, 41st in property tax burden and 32nd in sales tax burden.

Given that backdrop, along with Michigan’s nation-leading unemployment rate, Granholm makes a weak case for more taxes, especially when the state Senate has passed a budget bill that includes no tax increases.

Michigan residents might take heart from the remarks of Democrat Andy Dillon, the House speaker, who called the governor’s new tax proposals “showboating” and “theatrics.”

Sadly, Michigan seems headed for a repeat of the 2007 debacle when budget talks went down to the wire, the crisis-like atmosphere created by the governor led to Republican capitulation, and the Legislature hurriedly crafted ill-advised tax policy. The budget needs to be balanced by Sept. 30 or the state government will shut down.

Oakland County Executive L. Brooks Patterson is urging Republicans not to buckle this time around. “I told (Senate Majority Leader) Mike Bishop this, I think they ought to shut it down,” Patterson said.

Patterson advocates temporary funding for prisons and children’s health programs, but a shutdown of the rest of state government rather than another hurried, temporary solution.

“No man’s life, liberty or property is safe while the Legislature is in session,” Patterson said. And no promises on taxes are believable.