Taxes are not the problem...

Lansing State Journal: Taxes not hurting Michigan, study says Taxes not hurting Michigan, study says Auto industry decline cited as source of woes By Chris Andrews Lansing State Journal A weak auto industry - not high taxes - are at the heart of Michigan's struggling economy, according to a report released Monday. The report by the W.E. Upjohn Institute for Employment Research concluded that Michigan has lagged behind the rest of the nation since 2000 almost entirely because of the decline of Michigan's automakers. "We have over seven times the national average of employment in the auto sector," said Timothy Bartik, a senior economist at the nonprofit, nonpartisan institute. "If the auto industry had done better, we would have grown closer to the national average." Michigan's unemployment rate - now at 7 percent - has been above the national average for several years. The economy is the dominant issue in this year's gubernatorial election. The study, funded primarily by the Michigan Economic Development Corp., found that Michigan taxes are at or below the national average and the average of neighboring states. And it said eliminating the Single Business Tax without replacing the lost revenue wouldn't significantly help Michigan catch up with the rest of the nation in job growth. The cut in taxes would reduce public-sector employment, it added. A better strategy would be to lower taxes on new business investments while maintaining overall revenue by raising taxes on businesses not making new investment in Michigan, the report said. But John Truscott, spokesman for Republican gubernatorial candidate Dick DeVos, said he puts more stock in the experiences of business people creating jobs than in think tanks. And business leaders constantly complain about the Single Business Tax, as well as other taxes and regulations in Michigan. "With studies like this, it is easy to do the research in a way that gets the results you want," he said. "The fact is, we're losing jobs at an alarming rate." Tricia Kinley of the Michigan Chamber of Commerce said she hadn't seen the report but believes Michigan is a high-tax state. "If people want to say we're right in the middle of the pack, it doesn't explain why we can't compete." Bartik said the explanation comes down to the auto industry, which has shrunk as domestic automakers have lost market share and as technology allows more cars to be built with fewer workers. For every direct auto job that is lost, four jobs in other industries are lost, he said. The study also said that doubling the number of college graduates in the state would help the economy, but that would take many years to achieve. The report was primarily funded by the Michigan Economic Development Corp., which contributed $55,000 for the study. The Upjohn Institute contributed $10,000 to $15,000, Bartik said. MEDC President James Epolito said the report validates the approaches the state is taking to strengthening the economy, including tax credits and efforts to diversify into other industries, such as life sciences. But he said the auto industry will continue to be vital. "It is really going to be necessary that American automobile manufacturers get healthy," he said. Contact Chris Andrews at 377-1054 or candrews@lsj.com. This study probably burst one of Amway boy and the Michigan Republican collective bubbles, one of the "case" the Republicans and DeVos have against Granholm. But the question should be ask to Dick DeVos and the Michigan Republicans how can you blame Granholm for poor decision making by the auto industry?