Go Free Yourself

Want to know what happens when you raise taxes in a weak economy? Look no further than Michigan.

My beloved home state was the subject of an excellent Wall Street Journal editorial yesterday, entitled “Granholm’s Tax Warning.” Here’s an excerpt (including a mention of our friend and ally, Leon Drolet of the Michigan Taxpayers Alliance):

Michigan is now in the 18th month of a state-wide recession, and the unemployment rate of 6.9% remains far above the national rate of 5%. Ms. Granholm blames the nationwide mortgage meltdown and higher energy prices for the job losses and disappearing revenues, but this Great Lakes state is in its own unique hole. Nearby Illinois (5.4% jobless rate) and even Ohio (5.6%) are doing better.

Leon Drolet, the head of the Michigan Taxpayers Alliance, complains that “we are witnessing the Detroit-ification of Michigan.” By that he means that the same high tax and spend policies that have hollowed out the Motor City are now infecting many other areas of the state.

The tax hikes have done nothing but accelerate the departures of families and businesses. Michigan ranks fourth of the 50 states in declining home values, and these days about two families leave for every family that moves in. Making matters worse is that property taxes are continuing to rise by the rate of overall inflation, while home values fall. Michigan natives grumble that the only reason more people aren’t blazing a path out of the state is they can’t sell their homes. Research by former Comerica economist David Littmann finds that about the only industry still growing in Michigan is government. Ms. Granholm’s $44.8 billion budget this year further fattened agency payrolls.

Read the whole thing here.

(Hat Tip: Fark)

In a struggling economy, where the private sector eliminated 286,000 jobs in the first quarter of 2008, do you think federal, state, and local governments are:

a) also eliminating jobs?
b) not doing anything different?
c) hiring new workers at the fastest pace in six years?

If you guessed C, ding-ding-ding! You win. (Or lose, depending on how you look at it.)

According to the Bureau of Labor Statistics, governments (federal, state, and local) added 76,800 jobs in the first three months of 2008. From USA Today:

• The federal government increased its workforce by 13,800 in the first three months of 2008. Local governments added 47,000 and states 16,000.

• The Rochester, N.Y., school system added 289 teachers while the school population shrank by 1,300 students. It’s part of a state-funded effort to reduce class size. New York City is
adding 1,300 teachers. Florida and Texas are also hiring to reduce class size.

• The Texas city of Weatherford (pop. 25,000) added an assistant city manager, nine firefighters, three police officers and extra crews for roads and parks. “We have serious infrastructure issues that we need to get a handle on,” City Manager Jennifer Fadden says.

Read more here and here.

I’ve got some bad news. (Well, it’s bad news for everyone except Warren Buffet.)

From Human Events last week:

Washington has no budget problems that higher taxes cannot solve. So seems the message from Congress.

The House- and Senate-passed budgets would raise taxes on every American taxpayer by an average of $3,000 per household. But don’t expect Congress to share in the sacrifice: The budget would hike discretionary spending by 8 percent, and not cut a single government program.

I know I shouldn’t be surprised, but it doesn’t make it any less infuriating.