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)

I posted Monday about Chicago’s latest badge of dishonor—The City With the Highest Sales Tax—and today, the news showed up in a Wall Street Journal editorial, “Second City No More.”

The piece is chock full of numbers and percentages that tell the tale of Chicago’s love affair with tax dollars better than any words could. Here are a few:

• 10.25% (Chicago’s total sales tax burden after Saturday’s increase)
• $270 million (the amount represented by November 2007’s “fee increase”)
• $530 million (the total brought in by January 2008’s “real estate tax increase”)
• $234 million (Cook County’s deficit)
• $100 million (the amount of possible reforms, noted by the Chicago Civic Federation)

Great news, huh? This makes me so mad.