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.