Friday, March 09, 2007

Truth in Advertising

A few months ago, the state of Michigan was running a radio ad blitz, inviting companies to move there. The ads were voiced by actor Jeff Daniels, a Michigan native who still runs a small, not-for-profit theater in his home state. Firms that moved to Michigan, Mr. Daniels informed us, could take advantage of billions of dollars in state assistance and spport. Other ads in the series highlighted some of the companies that had taken the plunge, making the Wolverine State sound like an absolute business nirvana.

But today's Opinion Journal tells the other side of the story. Apparently, one reason the state wants more companies to relocate there is so it can tax the hell out of them. Michigan's Democratic Governor, Jennifer Granholm, has proposed a new corporate income tax, a two percent excise tax on 100 business services, and five percent death tax on estates over $ 2 million--measures almost guaranteed to drive more businesses out of the state. As the Journal notes, Michigan has lost more than 360,000 jobs since 2000; the state is saddled with an $860 million budget deficit, and per capita income is at its lowest in 75 years, relative to the national average. And the solution to those problems? Why raise taxes, of course!

In fairness, much of Michigan's economic woes can be traced to the steady decline of the nation's automobile industry, which is continuing its migration to more business-friendly, right-to-work states in the south. But Granholm's proposed increases in taxes and fees will actually increase the burden on businesses she's trying to bring to the state. In reality, Governor Granholm's proposal is nothing more than a standard, Democratic bait-and-switch. She eliminated the state's anti-growth single business tax, but (apparently) can't resist the temptation to other hike fees and levies that businesses must pay. Judging from the Journal article, it doesn't sound like companies are exactly rushing to Michigan, and the few that actually made the move may question their decision. Just this week, one of the state's oldest and largest bank holding companies, Comercia, announed that it will transfer its corporate headquarters from Detroit to Dallas, citing "better growth opportunites" in the Lone Star Stte.

As for Mr. Daniels, he professes to "love" Michigan in one of the ads, and it doesn't look like his Purple Rose Theater (located in Chelsea) will move anytime soon. But you've got to wonder if the actor realizes Governor Granholm's economic policies have made him the pitchman for something of a scam. Michigan (and its economic development fund, which hired Mr. Daniels) are eager to bring companies to the state, and even offers some generous incentives. But, once there, the Granholm plan would reduce potential advantages in the marketplace, thanks to the built-in costs of higher taxes and fees that Michigan firms would add to their products and services.

If Granholm's tax proposals are approved by the state legislature, business owners would have to be suckers to move their firms to Michigan. And even Harry Dunne--the dim-witted character that Mr. Daniels played in Dumb and Dumber--would understand that.


Ironwolf said...

You have this story completely wrong - it is worse than you have it posted.

Jennifer Granholm REFUSED to remove the Single Business Tax. So the Head of the Oakland County council (Brooks Patterson)used a loophole in Michigan law that says if a petition is brought by a private citizen and is passed by 60% of the House and Senate the Governor can't veto it. She vetoed the first attempt and so this was used. It was overwhelmingly passed.

Then it got even more damning. Brooks Patterson's Oakland County is a booming area. It is a solid contributor to over $300 million a year to Michigan. In other words they pay an EXTRA $300 million because they are run so successfully by Brooks they always are in the black.

Brooks used some clever accounting and called in some favors and refinanced their entire retirement and health care package. The cost a 1 time $3 million expense. Now this expense was out of the $300 MILLION that was being GIVEN to the Michigan government. The $3 million would have brought a 15 year savings of $150 million to Oakland County - or $10 million savings a year for 15 years.

Jennifer Granholm over-ruled Brooks Patterson and did not allow him to save his tax payers $150 million. Brooks Patterson was livid and he directly said to her face on a local radio station that she was the worst Governor in Michigan history and he will never attempt to work with her again.

Michigan is the victim of the Unions. Pure and simple. Cars are selling just not the crap being pushed out of Detroit. Toyota is building in Ohio and is paying the EXACT wages and benefits as the Union (UAW) without the Union overhead and extortion.

GM has a "Jobs Pool" where they pay $1.5 BILLION for people NOT TO WORK. The last one out of Michigan please turn off the lights.

eatyourbeans said...


It's not just the unions. It's management too. They got fat and happy together, and they danced over the brink together. Now they still don't get it that they're dead.

But let's be honest. The USA itself has the MI disease too; it just hasn't reached terminal stage yet.

Spook86 said...

Ironwolf--I relied on the WSJ for most of my information. Did not realize that it took an "end run" by the Oakland County Council (and the state legislature) to get the single business tax removed.

And BTW, is Mr. Patterson planning on running for governor next time around?

Finally, the use of Daniels as a "spokesman" should have been a tipoff. Since he's running a non-profit, the bottom line is less important. Guess the state's economic development council couldn't find a "real" businessman who would endorse the idea of firms relocating in Michigan.

BTW, I have a home in MS, about 45 miles from the site where Toyota will build its next plant. Same deal as Ohio (and the Toyota truck factory in Texas); union-level pay and benefits without UAW screwing everything up. Haley Barbour is angling for a couple of other auto plants, plus various suppliers. None of these companies are based in Detroit. No surprise there.

Thanks for the additional info on Granholm.