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Here is the article:
http://www.mlive.com/news/index.ssf/2010/04/taxes_in_michigan_are_out_of_w.html
Tuesday, April 20, 2010
The Michigan Financial Crisis
I know we tend to focus on the financial crisis on a national or global level but here is an interesting article about the financial situation in Michigan. I think it ties in nicely with the book we have been reading. The State of Michigan is receiving less tax revenue because of high unemployment rates and has less money to fund its projects. I think it interesting to see how the state is dealing with the predicament.
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I found some of the statistics regarding Michigan to be simply amazing but not unbelievable. The fact that one and six people in the state have lost their job or the fact that we are making 2 million less cars than a decade ago makes me understand why personal income in Michigan is 85 percent less than the national average. However, the one part of this article that struck me was the section on a graduated taxing system. Two of my friend's dad's own businesses in Michigan and they are already struggling because of increased federal taxes. By increasing state taxes to a much higher level for those making more money they will be much less apt to hire or retain employees. The quote that said "it's a slap in the face to entrepreneurs" is appropriate in this case.
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ReplyDeleteThe sad truth is Michigan's economy put almost all of its eggs in one basket. About ten years ago that basket disintegrated. I have always said it is so funny that the rest of the country's economy was booming in the mid-2000s. I always joke that Michigan never got that boom (except in housing prices). Michigan's economy has been in shambles for so long that I actually find it remarkable that things aren't worse in this state. I actually have to hand it to Michigan's politicians for handling the situation so much more skillfully than some other states (ie California). The recovery for Michigan will be slow in coming and involve significant population loss and brain drain until the state can recover and retool to handle a new generation of jobs because those auto industry jobs are not coming back, that industry has changed too much.
ReplyDelete--Tommy
I agree with Tommy - Michigan's economy has never been very good. And as far as the article, I think that we shouldn't complain as much because some states are much worse. We talked about California in class, but also mentioned that is will be happening in many states to come and what we are going to do. The fact is that many nations don't have separate states (Europe/Asia/Etc) so we are unsure of what actions to take when they go too far into debt because it hasn't happened yet.
ReplyDeleteWhat scares me the most is how much this is affecting school systems across the state. We hear all the time about another high school closing in Detroit, and I seem to forget that this is not an isolated problem for just that part of the state. When I read things like, "Dozens of school districts in Michigan will be essentially insolvent if lawmakers pile a fiscal year 2011 cut on top of the $165-per-pupil reduction approved for fiscal year 2010," I can really see the big picture of how this crisis is hurting or going to hurt the younger generations if nothing is changed.
ReplyDeleteI think the article does a good job explaining how broken Michigan's tax system is. As it mentions, we are one of only 7 states that still uses a regressive flat rate tax. In addition, the only place Michigan's economy has grown is services and yet that portion of the economy isn't taxed.
ReplyDeleteWhen I think of Michigan's economy I agree with Tommy and remember joking that way about it. I think our economy has been like the Detroit Lions. At some point we thought we were doing well and preparing for the future but we relied too hard on the auto industry as the Lions did on poor draft picks. I think I would jump off a bridge if they ever picked Tim Tebow(Get Su). Anyway Matt brings up a good point that our tax system has been the same way for too long. I definitely am scared that things could worsen for certain parts of Michigan. My mom is a director for a government branch in North East MI and she talks about how some of those areas have had the highest amount of foreclosures, my hometown Petoskey being the highest in the state, and how some schools have no school bus programs anymore. The point is, up there some kids have to travel up to twenty miles just to get to school and if their parents can't even afford to take them to school let alone to town to buy groceries things could worsen if urbanization occurs.
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