Sunday, June 29, 2008

Tax It and It Will Leave

The brilliant leadership in Michigan government continues to tax (and regulate) private business. Entrepreneurs love to make profit; they use it to create jobs. They love doing this so much that, when government punishes them, sooner or later, they quietly decide that they have had enough and they find a friendlier tax and regulatory environment. This is happening in Michigan. The evidence? Last month the unemployment rate went up 1.6 points to 8.5%.

The attached article by Detroit News columnist Nolan Finley says it all:

Here is an excerpt about a local business owner:

"No question that for us, the Michigan Business Tax and the ridiculous surcharge are affecting our ability to hire workers," says David Rhoa of Lake Michigan Mailers, a document processing firm. "I can pay money to hire more workers, or I can pay it to the state, but I can't do both."

Rhoa has 56 employees in Kalamazoo, a city that might have had 15 more had Michigan been competitive. Instead, Rhoa took his expansion to Indiana.

"We settled on South Bend for two reasons -- the Michigan tax increase and the minimum wage hike," says Rhoa, whose payroll ranges from near-minimum-wage workers to higher-skilled employees. "Indiana has one other thing Michigan doesn't have -- a pro-business attitude."

Even without asking, Rhoa says, Indiana offered him a tax abatement and paid for training his new hires. Rhoa says he is frustrated that Michigan doesn't weigh the consequences of policies. "When Gov. Granholm was promoting her Give Michigan A Raise campaign, she said that minimum wage workers would spend the extra money in local businesses and everyone would benefit. But that money didn't just materialize. It's money I would have invested in new trucks and equipment to create more jobs. They don't get it."

3 comments: said...

How many more David Rhoas are we going to see before folks take their heads out of the sand?

This isn't difficult stuff. It's basic economics. Tried and true. Been around for centuries. But it doesn't make a pretty soundbyte...


Anonymous said...

Well, no surprise here. Michigan needs to let companies make a profit, when that profit materializes let the companies give their employees raises as they see fit. Granted, there will always be those curmudgeons who refuse to pay their employees what they deserve, but forcing them to give them a raise hurts.

Michigan has the attitude that if a business is making a profit, they must be penalized for it. Thus, a business cannot give an employee a raise if they are making money, and they cannot give an employee a raise if they are not making money.

This hurts the employee who spends less, and this hurts Michigan businesses because the employees have less to spend. It is a vicious circle that has no winners.

Thanks Michigan government, thanks from this Michigan native and life long resident.

Anonymous said...

Yep, my daughter got a raise at her job at Wendy's. She is now making $7.40 an hour to stand in a window and take money from people.

Guess what, even she doesn't believe that her job is worth that much per hour. What is wrong with the people in Lansing. Do they have some kind of common sense disorder?