Michigan is not growing to keep pace with other states

[Canadian Visitor]

The focus needs to be on both.

Attracting people at a healthy rate to the city/state who are likely to reproduce as well as be productive citizen is critical if the local/state government expects to raise sufficient enough revenue to address those quality of life categories that you list.

May I suggest to you a different reason for the standard of living outcome?

Minnesota has the 7th highest per capita taxes in the United States at $6,600 and change per person.

Michigan is #28 at $4,000 and change per person.

An extra $2,400 per person in investment in quality of life produces a tangible gain and one which is self-sustaining and growth-encouraging.

https://files.taxfoundation.org/2019....Draft2-01.png

Lets look at the difference btw........its not just a difference in raw income.

Its a corporate tax rate in MN of 9.8% compared to 6% in Mich.

Its a higher sales tax rate in MN than Mich.

Mich also has a lower rate of personal income tax at 4.35% flat vs MN with a range of 5.35% to 9.85%

In other words, all those tax cuts in Mich did nothing to promote growth and everything to hinder it.

A higher tax state is more competitive in attracting business and immigrants.

[313WX]

May I suggest to you a different reason for the standard of living outcome?

Minnesota has the 7th highest per capita taxes in the United States at $6,600 and change per person.

Michigan is #28 at $4,000 and change per person.

An extra $2,400 per person in investment in quality of life produces a tangible gain and one which is self-sustaining and growth-encouraging.

https://files.taxfoundation.org/2019....Draft2-01.png

Lets look at the difference btw........its not just a difference in raw income.

Its a corporate tax rate in MN of 9.8% compared to 6% in Mich.

Its a higher sales tax rate in MN than Mich.

Mich also has a lower rate of personal income tax at 4.35% flat vs MN with a range of 5.35% to 9.85%

In other words, all those tax cuts in Mich did nothing to promote growth and everything to hinder it.

A higher tax state is more competitive in attracting business and immigrants.

I agree that Michigan's tax cuts were a mistake. I was against them at the time.

That being said, what's done is done now and you can't squeeze blood from a turnip. The people of Michigan who have taken a massive hit in their incomes over the past decade and are amongst the oldest in the country are not going to willingly open their wallets for the government to raise more tax revenue.

This does create a catch-22, because outside businesses and residents that local companies may want to attract as employees will not voluntarily consider moving to Michigan until it addresses its numerous quality of life issues.

[Canadian Visitor]

I agree that Michigan's tax cuts were a mistake. I was against them at the time.

That being said, what's done is done now and you can't squeeze blood from a turnip. The people of Michigan who have taken a massive hit in their incomes over the past decade and are amongst the oldest in the country are not going to willingly open their wallets for the government to raise more tax revenue.

This does create a catch-22, because outside businesses and residents that local companies may want to attract as employees will not voluntarily consider moving to Michigan until it addresses its numerous quality of life issues.

I can understand the argument as it would apply to those who are low income; but why not return to a progressive tax scheme and raise rates only on those making over 70k per year [[just to pick a number); or raise corporate tax [[which applies only to profits); and do so only on profits over $1M?

It doesn't create a windfall, but it would begin to allow reinvestment infrastructure and schools; while keeping taxes lower on poor and lower-middle-income citizens.

[Atticus]

May I suggest to you a different reason for the standard of living outcome?

Minnesota has the 7th highest per capita taxes in the United States at $6,600 and change per person.

Michigan is #28 at $4,000 and change per person.

An extra $2,400 per person in investment in quality of life produces a tangible gain and one which is self-sustaining and growth-encouraging.

https://files.taxfoundation.org/2019....Draft2-01.png

Lets look at the difference btw........its not just a difference in raw income.

Its a corporate tax rate in MN of 9.8% compared to 6% in Mich.

Its a higher sales tax rate in MN than Mich.

Mich also has a lower rate of personal income tax at 4.35% flat vs MN with a range of 5.35% to 9.85%

In other words, all those tax cuts in Mich did nothing to promote growth and everything to hinder it.

A higher tax state is more competitive in attracting business and immigrants.

As mentioned in an earlier post, Minnesota is an example of successful liberal state politics. The statistics reflect that. Most conservative cannot bring themselves to believe that conclusion however, because ideology tells them ALL higher tax and social welfare programs are bad. The truth is some social welfare programs are bad, but some are good. The difference between Minnesota and Illinois is one state government is smart enough to realize that, and the other is not.

Conversely, the numbers also show that Utah is doing well and Kansas is not. Again, Utah has figured out which conservative politics actually work, and Kansas hasn’t. But that is a topic that never gets discussed because most conservatives love both Utah and Kansas style state governments, and of course liberals loathe both. Despite that, what gets missed is that one form of conservatism works, and the other does not. Unfortunately for Michigan, the state legislature is much more in line with Kansas’ way of thinking as opposed to Utah, Florida, Texas, etc.

[Canadian Visitor]

As mentioned in an earlier post, Minnesota is an example of successful liberal state politics. The statistics reflect that. Most conservative cannot bring themselves to believe that conclusion however, because ideology tells them ALL higher tax and social welfare programs are bad. The truth is some social welfare programs are bad, but some are good. The difference between Minnesota and Illinois is one state government is smart enough to realize that, and the other is not.

Conversely, the numbers also show that Utah is doing well and Kansas is not. Again, Utah has figured out which conservative politics actually work, and Kansas hasn’t. But that is a topic that never gets discussed because most conservatives love both Utah and Kansas style state governments, and of course liberals loathe both. Despite that, what gets missed is that one form of conservatism works, and the other does not. Unfortunately for Michigan, the state legislature is much more in line with Kansas’ way of thinking as opposed to Utah, Florida, Texas, etc.

Certainly, uber-partisanship/uber-ideological rigidity is unhelpful.

I think the issue of the U.S. 2-party system that by its nature promotes an either/or dichotomy.

Most jurisdictions around the world don't have this....

Worth saying, in their own way, neither do Utah or Minnesota.

That is to say, in those jurisdictions, while there is certainly a partisan-lean; there is more consensus on outcomes/goals and more openness on methods across party lines.

So one may see a greater emphasis on community fundraising or charity via church in one case; but that is actually delivered, vs a somewhat more government program based approach in another, that doesn't result in an expansive state doing everything, but does see effective programs.

To achieve either requires a greater effort at social consensus and less tribalism.

[Wesley Mouch]

...A higher tax state is more competitive in attracting business and immigrants.

Hey CV, what makes you think that high taxes are the cause of success rather than a result?

Seems just as possible that high taxes are enabled by an environment of success and happiness.

I hear your idea that its the extra spending that can 'begin to be enabled' by extra taxes. I'd suggest it may be that people are willing to tolerate high taxes to live where they get 'high' benefits. These could be social welfare transfers, but could also, for one example, just be living in a more vibrant urban environment [[where I think MSP is ahead of DTW).

What makes you think high taxes are an enablibng cause rather than yet-to-be harmful effect.

[Canadian Visitor]

Hey CV, what makes you think that high taxes are the cause of success rather than a result?

First, as I would hope is obvious, 'high taxes' unto themselves certainly are not a cause of happiness/success etc.

'Higher' taxes [[the U.S. does not have a high-tax jurisdiction overall by global standards) are a tool which facilitates investment that attracts success.

The evidence is already laid out in the links above; higher rates of High School graduation, and post-secondary attainment are closely correlated with greater economic success.

No surprise there, dentists make more money that McStaff at the drive-thru.

But raising that education level is a public investment. Even if per student funding were the same [[which is often is not); the longer students stay in school, the more they cost, because they are simply more numerous.

True at the HS level and in any State College system.

Further, while students, they aren't likely working full-time, which means they aren't paying as much, if any, income tax.

That in turn means other taxpayers must pick up the tab, thus higher rates.

A more educated workforce attracts more high-paying jobs, it costs money.

Likewise, more and better quality infrastructure isn't free; some of it may be covered by tolls as opposed to taxes; but where that infrastructure includes, power, sewer/water, roads, bridges, transit, schools, public hospitals etc etc; taxes are a near-certain factor.

The benefit to business is clear in terms of logistics and higher-quality, happier workforce; while individual citizens are happier, picking up shorter commutes, communities they are prouder to live in, better schools for their kids etc.

There's nothing shocking here, with some rare exceptions, mostly tied to the energy sector, higher taxes in the U.S. and around the world are linked to a higher standard of living; lower taxes are linked to a poorer standard of living.

That should not be used an argument for infinitely high taxes, or shocking increases; but clearly Michigan has lots of room to raising taxes in a U.S. context without being remotely uncompetitive.

If low taxes were the answer, Michigan would be in the midst of a profound decade-long boom.

That it is not, correlates with an education system that under performs and poor infrastructure, both, at least in part, due to inadequate funding.

[Wesley Mouch]

First, as I would hope is obvious, 'high taxes' unto themselves certainly are not a cause of happiness/success etc. ...

Thanks for your opinion. The other opinion would be that high taxes are the result of success rather than the cause. Any reason why this doesn't make sense to you as well?

The idea that more spending translates into better results in the future makes sense, but so does my counterpoint that past success may have resulted in present higher taxes [[in MN in your example).

Again, thanks.

[Canadian Visitor]

Thanks for your opinion. The other opinion would be that high taxes are the result of success rather than the cause. Any reason why this doesn't make sense to you as well?

The idea that more spending translates into better results in the future makes sense, but so does my counterpoint that past success may have resulted in present higher taxes [[in MN in your example).

Again, thanks.

Wesley, I always have an open mind to the evidence. So if you have any in support of your thesis, I'm more than happy to consider it.

In the absence of that, I must say it doesn't make intuitive sense to me; and here's why.

1) Lets look at the list of countries, and/or U.S. States w/the healthiest economies and highest standards of living.

Lets exclude those that very clearly correlated with energy resources [[be than Saudi Arabia or Alaska); and then review the list.

With the odd exception to be sure, most are high[[er) tax jurisdictions.

The first thing that would seem to indicate is that high taxes are not an impairment to that success.

We might not know that if the taxes only recently arrived at a higher level.

But if one examined most of the jurisdictions in question, their higher-tax status has been in place for a bare minimum of a decade and in most cases much longer.

2) Where we know this 'high[[er) tax' status has been a multi-decade phenomenon it seems inherently unreasonable to say it is the result of success. If one goes far enough back in history everything could be based on anything. But I should think in reviewing present performance the key would be the previous 10-30 years. Where those were all high[[er) tax years; it seems reasonable to infer success has followed that tax regime.

3) We have a control situation now in the United States, one in which the majority of lower-tax states have under produced economically, and typically offer a lower standard of living.

Surely, if lower taxes were the key to success, that success would have arrived.

But Kansas, Michigan, Indiana, amongst others have been on a drive to be lower-cost jurisdictions in taxes and labour, and all have a mediocre [[at best) record of achievement.

4) We know the link to education and a skilled labour force is absolutely key, all the evidence supports this.

That is the result of an investment that can only come from greater tax revenue and by no other means.

You can't hire more, and more qualified teachers, increase the number of post-secondary opportunities, and lower tuitions without money to do so. Money that comes from taxes.

5) This record holds here in Canada, the 4 best performing economic provinces, Quebec, BC, Ontario and Alberta have the highest ranking/performing education systems. They also have the highest per capita government expenditures, and with the exception of Alberta [[which has substantial energy revenues) are all the highest taxing provinces as well.

6) Finally, why would 'success' result in higher taxes? Sure, growth in population requires investment, but it should also finance it. It doesn't follow to me that people with higher incomes [[who will automatically generate higher income taxes in a progressive system, and higher sales taxes as they spend more) will demand rate increases to impinge on their prosperity.

Do you have any evidence in support of a contrary position?