Monday, October 1, 2007

Michigan taxpayers take a hit

In the late hours of September 30, 2007, the Michigan Legislature finally gave Governor Granholm nearly everything she wanted. Taxes were raised by $1.3 billion per year in the form of increased income taxes and a new sales taxes on a number of never before taxed services.

Who won and who lost last night? Unquestionably the losers were the taxpayers, working families and business owners of this great state. The $1.3 billion in new revenue to the state treasury is money that otherwise would be invested in goods and services, jobs and expanded businesses. Job providers will have just that much more of a hurdle to clear. As taxpayers realize they have a smaller check each week, and more taxes to pay for services they never had to pay before, they will realize they have less discretionary income. That means fewer cups of coffee down at Beaner's. Maybe they won't go to the movies, or maybe they will go but not buy popcorn and Good-n-Plenty. Perhaps decisions will be made not to purchase a new CD player for the car, or a new basketball backboard and hoop for the driveway. All these things will mean less trade, less commerce, less wealth creation.

But who are the winners? The Legislature? No, "we" cannot be proud of our performance. We had 8 months to balance the budget and couldn't do it. We spent much more than we have in the bank. We wasted most of the summer accomplishing little and then rushed through a pile of legislation without even putting them through the committee process.

Some might say the Governor was a winner. She essentially got her way, that is true. But does that make her a winner? I suspect that by next Spring as taxpayers realize fully the burden they must endure, they will not see her as a winner. In fact, there may be a backlash of anger unanticipated by anyone in her administration.

I believe there was only one winner last night: Big Government. Bureaucracy. They were the winners. Government is back on the growth track after a couple of years of staying within its means. The budget this year will likely end up growing at twice the rate of inflation.

Big Government is the new protected class, the elite. The average government worker makes substantially more than the average private sector employee. Ronald Reagan was right: Bureaucracy is the closest thing to eternal life you will ever find on this earth.

So, if you want to raise a glass and toast the "winner" look to Lansing.

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