Michigan economy up for overhaul
The midterm elections are drawing near. Congressional posts and Michigan’s governorship are up for election.
Soon-to-be former governor Jennifer Granholm can’t run again, so the job is especially contested. The candidates are Democrat Virg Bernero and Republican Rick Snyder. According to two Detroit Free Press articles, both of them have very controversial ideas on how to help Michigan’s economy.
Snyder wants to replace the State Business Tax with a new tax on corporate profits, and Bernero wants a state-owned bank. The article about Snyder said, “Snyder wants to replace the Michigan Business Tax, which he calls ‘the worst business tax in the country,’ with a 6 percent levy on corporate profits. The switch would result in a $1.5 billion tax cut for businesses.”
Another article said, “… chartering a state-owned bank to jump start business lending and ending the 22 percent surcharge on the state business tax are likely to attract the most attention if he is elected. The bank proposal — which would make Michigan only the second state in the country with a state-owned financial institution — almost certainly would elicit fierce opposition.”
That would be an understatement. Considering credit unions do most of what a state bank could — lend money more freely than a big bank concerned only with risk and profit — I’m not sure what good implementing a state bank will do other than tick off people. It’s interesting both candidates are against the business tax, but their ways of dealing with Michigan’s foundering economy are obviously very different. And yet those ideas don’t quite mesh with party lines.
What kind of Republican would want to tax corporate profits? What kind of Democrat wants lower taxes? In their bids for governor these two are trying to cater to their state’s needs rather than strictly follow the party platform, and that’s almost worth the insane ideas their supporting.
A state bank would just add more bureaucracy, and as I mentioned, a credit union or community bank can do the same thing, albeit maybe not with as much money. While cutting taxes for businesses is usually a good thing, replacing the lost revenue by taxing profits of bigger companies is probably not. Whether these two are trying to be controversial, different or are incredibly desperate to find solutions to Michigan’s problems, I’m not sure. I’m also not sure if testing these ideas is worth the cost of failure, and I don’t think Michigan could handle their failure very well.
Cutting taxes might be a good idea, but lost revenue needs to be replaced. Better yet, the government could reduce spending so it doesn’t need the lost revenue. Taxing corporate profits might help in the short term, but the long-term loss to the economy as a whole doesn’t seem worth it. A state bank probably would increase costs, unless they charged a lot of fees, and would make it as bad as a regular bank. In either case the question is ultimately the same: What’s best for Michigan?