Wednesday, May 14, 2014

Report: Michigan's $51 billion in tax cuts the "wrong path to prosperity"

Posted By on Wed, May 14, 2014 at 4:52 PM

Since 1994, Michigan has conducted a $51 billion tax-slashing experiment, one that has ultimately "failed," says a new  report on the state's tax policies.

The report, titled "Michigan's Tax Policies: Wrong Turns on the Path to Prosperity," offers an in-depth look at Michigan's tax policies dating back to the passage of Proposal A, the package of bills that restructured how the state funds public schools.

Those cuts resulted in a loss of $26.9 billion in taxes for the state School Aid Fund and $6.2 billion in revenue-sharing to cities, according to the report written by Douglas C. Drake, the former head of the state Treasury Department's Office of Revenue and Tax Analysis.

In the report, Drake writes: "It would seem that if Michigan is a laboratory of democracy, the experiment has been run, and the data is in. Dramatic cuts in taxes do not increase prosperity measured by income of average citizens, or add to a state’s ability to create jobs."

The report notes it was funded by a coalition of teacher groups and unions. But it's an extremely detailed overview that offers insightful context on the impact that state policy has had on Michigan over the last two decades.

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