Friday, April 17, 2009

Dear Tom: Your Theories Don't Work

From a recent e-mail from my State Representative Tom Pierce:
What if government leaders looked at the economic crisis differently and reduced the tax on all job providers, making Michigan the most competitive state in our region or even all fifty states? If they did, I believe the State of Michigan would be saying to all job providers interested in starting a new company or growing their business that Michigan welcomes them with open arms. Reducing the tax burden on job providers would enable them to grow and hire additional employees, resulting in greater income tax revenue to the state. It would also generate economic activity in Michigan creating greater revenue from sales tax. A change like this could turn job losses into job growth and reduce the pressure of growing demand on the state's welfare budget. Making Michigan business taxes more competitive across the board would level the playing field for all job providers and would remove government arrogance in picking winners and losers.

Dear Tom;

I think your analysis of the benefits of tax reductions to attract business is deeply flawed and I'd like to see some facts and data that backs it up. John Engler cut taxes for years and all it did was drain the state government of money it needed to provide the services people expect. Engler's policies did not attract new businesses and did next to nothing to stop the major manufacturers from leaving.

I am a small business owner and I can say from experience that state tax rates have absolutely zero impact on my business decisions. The decline in state services ranging from university and K12 budgets to deteriorating infrastructure, dilapidated parks, overwhelmed social service providers are far more important to me - and the only way to pay for them is adequate taxation.

The idea that lower taxes generate economic growth and higher revenue is a pipe dream that has no support in the economic data. It's a belief not a theory. If you can provide impartial data that backs it up, I'd be happy to reconsider.

Best regards,

- Snipe

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