Tag: mackinac center

Cigarette Taxes and Smuggling

The Mackinac Center’s Michael LaFaive and Todd Nesbit have released a new study on the ill-effects of raising cigarette taxes at the state and local level. Cigarette tax hikes have become a popular choice for spend-happy state policymakers looking for money in these tough economic times.

Also check out their accompanying video on the topic:

Bad Advice from Gov. Polar Star

In 2006, Michigan Gov. Jennifer Granholm told citizens, “In five years, you’re going to be blown away by the strength and diversity of Michigan’s transformed economy.” When those words were uttered, Michigan’s unemployment rate was 6.7 percent. It’s now almost 13 percent.

Although Michigan’s economic doldrums can’t entirely be pinned on Granholm, her fiscal policies have not helped, such as her higher taxes on businesses.

The Mackinac Center’s Michael LaFaive explains why Granholm’s grandiose proclamation in 2006 hasn’t panned out:

In this case, Gov. Granholm was promoting her administration and the Legislature’s massive expansion of discriminatory tax breaks and subsidies for a handful of corporations. The purpose and main effect of this policy is to provide “cover” for the refusal of the political class to adopt genuine tax, labor and regulatory reforms, which they shy away from because it would anger and diminish the privileges and rewards of unions and other powerful special interests.

LaFaive’s colleague James Hohman recently pointed out that “Michigan’s economy produced 8 percent less in 2009 than it did in 2000 when adjusted for inflation. The nation rose 15 percent during this period.”

Granholm has written an op-ed in Politico on how federal policymakers can “win the race for jobs.” This would be like Karl Rove penning an op-ed complaining about Obama spending too much. Oh wait, bad example.

Granholm advises federal policymakers to create a “Jobs Race to the Top” modeled after the president’s education Race to the Top, which as Neal McCluskey explains, has not worked as she claims. Granholm’s plan boils down to more federal subsidies to state and local governments and privileged businesses to develop “clean energy” industries.

Typical of the dreamers who believe that the government can effectively direct economic activity, Granholm never considers the costs of government handouts and central planning. A Cato essay on federal energy interventions explains:

The problem is that nobody knows which particular energy sources will make the most sense years and decades down the road. But this level of uncertainty is not unique to the energy industry—every industry faces similar issues of innovation in a rapidly changing world. In most industries, the policy solution is to allow the decentralized market efforts of entrepreneurs and early adopting consumers figure out the best route to the future. Government efforts to push markets in certain directions often end up wasting money, but they can also delay the development of superior alternatives that don’t receive subsidies.

Granholm recently received “Sweden’s Insignia of First Commander, Order of the Polar Star for her work in fostering relations between Michigan and Sweden to promote a clean energy economy” from His Majesty King Carl XVI Gustaf. Unfortunately, her prescription for economic growth would be a royal mistake.

Michigan Court Inexplicably Tosses Suit, Endorses Forcible Enlistment of Day-Care Workers into the State Government

When lawyers and other commentators say that a court did not properly explain its decision, it’s typically for hyperbolic effect. But, in a bizarre move, a court in the failed great state of Michigan has dismissed an economic liberty case brought by our friends at the Mackinac Center Legal Foundation for reasons the court quite literally did not explain.  The court simply denied the plaintiffs’ complaint and that was that.

Home-based day care owners Sherry Loar, Michelle Berry, and Paulette Silverson have all been taxed by the Michigan Department of Human Services because, according to the state, they are somehow employees of the state and (further!) must pay union dues.  because this baseless assertion comes directly from the state DHS, an executive department, among the significant constitutional objections to the case presents separation of power problems.  (Ok, I haven’t studied the Michigan Constitution, but I assume they separate their powers there.)  Enough ridiculous laws are passed by state legislatures – more than 40,000 last year alone – we don’t need state executive agencies getting into the act.

Yet, the Michigan Court of Appeals has nothing at all to say about the case.

Inexplicable – and unpardonable.

Press Release Economics in Michigan Picked Apart

This morning I blogged on the wave of state governments giving away taxpayer money to businesses in the name of “creating jobs.”  One of the examples I mentioned is the Michigan Economic Development Corporation (MEDC), a state program that exists to generate press releases to provide cover for the state’s lamentable fiscal policies.

Michael LaFaive at the Mackinac Center for Public Policy in Michigan was kind enough to send me a recent report he wrote on the folly of state subsidies to businesses.  State officials like to solicit studies from local universities that just happen to conclude that such-and-such government program is creating X number of jobs.  (Of course, in the rare occurrence that a study doesn’t come back with what the bureaucrats were expecting, such study will likely disappear into thin air.  I’ve seen that happen first hand.)  Michael’s paper deconstructs a study on the purported benefits of Michigan’s film maker subsidies, which was prepared by Michigan State University at the behest of the MEDC.  A quote he cites from a 2006 study on tourism-related economic development programs nails it:

“Most economic impact studies are commissioned to legitimize a political position rather than to search for economic truth. Often the result is mischievous procedures that produce large numbers that study sponsors seek to support a predetermined position.”

If you read nothing else, read the section on page 4 entitled “Why Government Subsidies Won’t Save Michigan’s Economy.”  The reasons apply to all fifty states, not just Michigan.