Michigan, Meet Arthur Laffer …

Will they ever get it? You can not tax your way to prosperity. Once again, politicians have a slippery definition of “investment.” Dr. Laffer laughs last. ;-)

Granholm’s Tax Warning – WSJ.com: “Officials in Lansing reported this month that the state faces a revenue shortfall between $350 million and $550 million next budget year. This is a major embarrassment for Governor Jennifer Granholm, the second-term Democrat who shut down the state government last year until the Legislature approved Michigan’s biggest tax hike in a generation. Her tax plan raised the state income tax rate to 4.35% from 3.9%, and increased the state’s tax on gross business receipts by 22%. Ms. Granholm argued that these new taxes would raise some $1.3 billion in new revenue that could be ‘invested’ in social spending and new businesses and lead to a Michigan renaissance.

Not quite. Six months later one-third of the expected revenues have vanished as the state’s economy continues to struggle. Income tax collections are falling behind estimates, as are property tax receipts and those from the state’s transaction tax on home sales.

The tax hikes have done nothing but accelerate the departures of families and businesses.

Research by former Comerica economist David Littmann finds that about the only industry still growing in Michigan is government.”

Related posts:
You Can’t Soak the Rich or Laffer Revisited
Cretin or Crook?: Obama on capital gains taxes
Arthur Laffer on the ‘Stimulus’ Package