![[Photo of Michael D. LaFaive]](/media/images/people/LaFaiveMed.jpg)
Michael D. LaFaive
Director of the Morey Fiscal Policy Initiative
Michael LaFaive is director of the Morey Fiscal Policy Initiative for the Mackinac Center for Public Policy, where he has worked for more than 15 years.
He is the author or co-author of hundreds of essays, commentaries and blog posts and 12 studies on fiscal policy topics as varied as local and state privatization efforts, corporate welfare, school finance, state budgeting and cigarette taxes.
Among his studies is the Mackinac Center for Public Policy’s largest, a nearly 200-page state budget analysis that recommended more than 200 ideas for trimming some $2 billion from the state budget without cutting Medicaid or School Aid funding. Many ideas first presented by LaFaive in 2003 have been adopted or adapted by lawmakers in Lansing.
He is also the originator of the Center’s annual school privatization survey, which routinely garners a 100 percent response rates from districts. There is no database of competitive contracting like it in the United States. In addition to this product, LaFaive authored in 2001 a 26-page, full-color edition of Michigan Privatization Report specifically dedicated to fixing Detroit. The ideas in that publication are more relevant today than when it was published.
LaFaive is perhaps best known, however, for his cutting-edge, scholarly work examining state “economic development” programs. His studies and frequent commentaries on this topic have garnered him a national, if not international reputation as a respected government development critic and were probably influential in the decision to kill the Michigan Economic Growth Authority, the state’s high-profile corporate welfare program.
LaFaive is typically interviewed more than 125 times a year by members of the press seeking comment on fiscal issues and remains a popular public speaker.
He has undergraduate and graduate degrees in economics from Central Michigan University.
LaFaive is married and resides in Midland, MI.
By Michael D. LaFaive
Read All About It
State laws redistribute wealth to beer and wine distributors. … more
Taxes and the Life and Death of Great American Cities
Low-tax metropolitan areas experience much greater growth than high-tax ones. … more
State Regulations Suffocate Hospitality Industry
Rep. Doug Geiss (D-Taylor) wants to ease some of the regulatory burdens on Michigan’s hospitality industry. … more
Another MEGA Loser
In the latest government economic development failure in Michigan, Evergreen Solar files for bankruptcy. … more
Liquor Panel Formalized
Time to change liquor laws to finally favor consumers. … more
Run From the Border(s)
One of MEGA's first "winners" ends up a loser. … more
Michigan State Senator Offers Cigarette Tax Cut to Cut Smuggling
Lowering the cigarette tax would reduce smuggling and smuggling-related violence. … more
Distilling the Truth
Beer and wine monopoly "valiant" in fight against competition. … more
Pontiac Should Have Listened to Center Experts
Will Detroit pay attention to Pontiac's example? … more
Some Good GDP News for Michigan
Michigan’s 2009-2010 state GDP growth rate was 2.9 percent, its best since 2002. … more
Good, Bad and Ugly of Gov. Snyder's Budget
Gov. Rick Snyder’s first budget fell short of the “atomic bomb” promised by Lt. Gov. Brian Calley, in part due to the fact that a megaton of further spending and tax cuts were left on the table. Overall, the budget moves the state in a positive direction with greater tax simplicity, more transparency, less corporate welfare and fewer discriminatory tax policies. … more
Extending Exemptions
Michigan currently provides a 100 percent income tax exemption for government retirement benefits, but the exemption is capped for benefits earned by retirees who worked in the private sector. … more
Four Cheers for Gov. Snyder
The first three weeks of Gov. Snyder’s administration has provided plenty to cheer, especially on fiscal policy issues. … more
Gov. Granholm Leaves Michigan to Find Work
Today is the 5th anniversary of Gov. Jennifer Granholm’s promise that Michigan residents would be “blown away” by the gobs of jobs her latest economic development program would create. How ironic then that she of all people would flee the state to find work. … more
Projection: Repealing MBT and Surcharge Creates 120,000-plus Jobs
The first bill introduced in the Michigan House this year would repeal the much-reviled Michigan Business Tax 22 percent “surcharge,” and the first Senate bill would repeal the MBT altogether. Gov. Rick Snyder has proposed replacing the tax with a 6 percent corporate income tax, a change that would mean a big net tax cut for job providers. … more
GR Press Editorial Correct on Muni Spending
Applause is in order for the Grand Rapids Press Jan. 5 editorial “How to save money for local governments,” which correctly concludes that removing barriers to freer association between local units of government can cut costs. … more
Past State of the State Speeches Show Wide Variation in Proposed Government Expansions/Contractions
The Mackinac Center has tallied proposed expansions and limitations in each Michigan State of the State address since 1969. While not perfectly scientific, the exercise may provide some insight into an administration’s mindset. What do the past speeches tell us? … more
Sympathy for Politicians, Staff
As significant and real reforms and spending cuts are being discussed in Lansing, it’s hard not to feel a touch of sympathy for the “constituent services” staffers employed by lawmakers, and even for some of their politician bosses. … more
MBT Surcharge Repeal Could Create 27,900 New Jobs Through 2016
It’s probably no coincidence that the first bill (HB 4001) introduced in Michigan’s new Legislature is to repeal the 21.99 percent surcharge slapped onto the Michigan Business Tax in 2007. The surcharge is despised by the business community, and is seen as a job killer by policy analysts and politicians alike. … more
Are Corrections Costs a Mystery?
A story in the Jan. 10 edition of the MIRS Capitol Capsule reports that, according to the National Institute of Corrections, Michigan spends more than $5,200 more to lock up a prisoner for a year than the national average. Also, nearly 29 percent of the state workforce is employed by the Department of Corrections, and it will absorb 23.1 percent of the current year’s general fund budget. This is hardly new information.
Not surprisingly, Gov. Rick Snyder and others are looking to lower those costs. … more
Not surprisingly, Gov. Rick Snyder and others are looking to lower those costs. … more
Michigan's Budget Problems Bigger Than You Think
Early indications are that our new governor is acting boldly and wisely in his attempt to right size Michigan’s fiscal ship. That’s good news, and he should be applauded, in part due to the fact that he will need the moral support. Why? The budget is in worse shape than even he and members of the media have probably fathomed. I’m not the first budget analyst to notice this, but I may be the first to say it out loud. … more
Motor City Finance: Then and Now
Ten years ago this month the Mackinac Center mailed a special, 28-page, full-color, Detroit-specific edition of Michigan Privatization Report to editors across Michigan. We had recently completed a comprehensive review of the city’s budget, and were deeply concerned by what it revealed. … more
We're No. 2!
In still-bad-but-not-worst-possible news, for 2010 — the first time since 2005 — another state (New Jersey) has beat out Michigan in the annual United Van Lines ranking of state outbound migration. … more
State Should Reform PA 72 of 1990
Michigan’s local governments face fiscal challenges in 2011. The state already has a pretty good policy in dealing with its local units as their finances are stressed, but this policy should be improved in a few ways so that local governments continue to be solvent as taxable property values fall and spending pressures increase. … more
Saginaw Fails to Repeal Prevailing Wage
Saginaw County officials have quietly buried a previously scheduled vote to repeal its “prevailing wage” ordinance for construction projects costing more than $50,000. Prevailing wage laws prohibit granting a government contract to the lowest bidder unless the company pays above-market, “union-scale” wages. … more
Fieldstone Golf Course Should Be Sold
In a time of increasing pressure on local budgets, municipal managers should reach first for the lowest hanging fruit on the savings-tree: government golf courses. Let the slicing begin. … more
Tear Down This 'Film Industry' Facade
Ending the handouts would send a signal that this state is done playing games with ephemeral and failed "economic development" programs, and instead will focus on a real economic growth agenda, including across-the-board tax relief, labor law changes and other regulatory reforms. … more
Pontiac Contracts With Oakland County Sheriff for Police Services
By contracting with the county to provide police services, the city of Pontiac will get a step closer to fiscal solvency. … more
State of Embarrassment
Citing companies receiving targeted tax breaks and subsidies has gone from an "economic development" victory lap to a series of embarrassing blunders. … more
Republican Vows — Seven Lean Years Later
A PR stunt a few years back shows how "economic development" programs are really political development programs. … more
Horse Racing Subsidies Fail to Win, Place or Show
If the state's political establishment thinks Michigan's adult population should have access to gambling, then it should remove the obstacles to other forms, not use that as an excuse to redistribute taxpayer dollars to a handful of players in a politically favored one. … more
Questionable MSU Scholarship Hurts Policy Debate
As revealed by the Mackinac Center on Wednesday, a school consolidation study by Michigan State University's Education Policy Center senior scholar Sharif M. Shakrani contained what appeared to be unattributed material (about 800 words) lifted from work that was not his own. The report received wide press coverage, yet it is the third study of questionable quality in 20 months from MSU-affiliated researchers, a pattern that has damaged the public policy debate in Michigan. … more
Pay Attention to Candidates' Stance on Subsidies
When considering which candidates to vote for in November — regardless of the office — be sure to examine their stance on Michigan's growing empire of economic development programs, which selectively hand out subsidies and tax favors to politically favored industries and firms. … more
MEGA Careful?
How much background research does Michigan's corporate welfare bureaucracy actually perform on the potential recipients of its selective tax breaks and subsidies? Due to recent embarrassments the amount may be increasing, but until now the answer appears to be, "Not much at all." … more
Hangar42 Deal Shows Misguided Incentive Policies
The only way to avoid these problems in the future is to shut down the MEDC and the programs it administers. They don't work, are unfair and open to abuse. … more
Editorial on Tax Subsidies Ignores Facts
The Grand Rapids Press on July 27 published an editorial defending state business tax incentives ("Michigan needs to keep offering business tax breaks to create jobs," July 27) that fails to recognize one vital argument: They don't work. … more
Migration Troubling, Especially in Michigan
United Van Lines has released mid-year data on where it takes its clients to and from in the 48 contiguous states. Once again, Michigan finds itself in the number one position. … more
MEDC Letter an Admission of Failure
On May 25, the executive committee of the Michigan Economic Development Corp. publicly cried foul over "unwarranted criticism" of the agency and warned that "political in-fighting" could hurt the state's business investment climate. But the criticism of the state's chief "jobs" department is not only warranted, it's overdue. … more
Government Secrecy Rules on $10 Million Film Studio Subsidy
Hard-earned taxpayer dollars are being handed over by the state to these film studios, and when legitimate questions and concerns are raised the response from those in charge is, "Trust us. We know what's best for you." Voters and taxpayers shouldn't accept that, and neither should state legislators. … more
More Information Trickles Out Regarding Hangar42
Grand Rapids Press reporter Chris Knape continues to dig into the questions raised by the Mackinac Center about a potential $10 million subsidy for a film studio infrastructure project called Hangar42. … more
New Facts Exposed in Hangar42 Investigation
In following up on questions raised by an ongoing Mackinac Center investigation, Grand Rapids Press reporter Chris Knape added two facts to the pattern of information so far known about the proposed Hangar42 film subsidy deal. … more
Taxpayers Are Not Sheep, Part II
People often respond to government-generated disincentives such as high taxes by voting with their feet, migrating to places with greater economic freedom and opportunity. … more
Taxpayers Are Not Sheep Lining up to Be Sheared
Notwithstanding the claims of many tax-friendly Lansing politicians and their government employee union patrons, it appears that taxation really does matter. … more
Bills Swap Selective Business Tax Breaks for Broad-Based Relief
A package of 17 bills sponsored by State Rep. Justin Amash would eliminate or reduce targeted business tax breaks in favor of across-the-board business tax relief. The idea is to minimize state interference in business by preventing government planners from handing out special favors to a favored few, while simultaneously granting a measure of relief to all MBT payers. After all, if tax cuts create economy- and job-boosting "incentives" for a few hundred firms selected by government "economic development" officials, won't lower taxes do the same the 100,000-plus firms who get no special treatment? … more
Michigan’s Rank Position
There is no perfect method known for measuring a state's economic well being, or forecasting its future prospects. Nevertheless, over time many scholars using different methodologies have presented a relatively consistent picture: Michigan's economic performance and outlook have trended in a negative direction since their first reports. It's not hard to understand why: Lawmakers here continue to stifle growth with counterproductive policies. … more
Federal Reserve Study: Economic Freedom Matters
A new study published by the Federal Reserve Bank of St. Louis, called "Economic Freedom and Employment Growth in the U.S. States," concludes that there is a link between economic freedom and employment growth. Other studies have come to the same conclusion. One of the things that makes this one different is its findings on labor markets. The authors write: "In addition, we find that less restrictive state and national government labor market policies have the greatest impact on employment growth in U.S. states."
That conclusion doesn't bode well for Michigan, which is known for having a relatively hostile labor climate and which over the last 10 years has seen its overall national economic freedom ranking tumble. … more
That conclusion doesn't bode well for Michigan, which is known for having a relatively hostile labor climate and which over the last 10 years has seen its overall national economic freedom ranking tumble. … more
State MEGA Audit Finds MEGA Problems
The Michigan Auditor General yesterday released a 72-page audit of the Michigan Economic Growth Authority program, finding that it is poorly administered. MEGA is the state's flagship "jobs" program, granting selective tax breaks and subsidies to particular firms selected to be "winners" by its staff.
The Auditor General's examination focused on reviews conducted by the agency that oversees MEGA. In other words, this was a review conducted to determine whether or not MEGA companies granted selective tax breaks have used proper "job count and salary information." … more
The Auditor General's examination focused on reviews conducted by the agency that oversees MEGA. In other words, this was a review conducted to determine whether or not MEGA companies granted selective tax breaks have used proper "job count and salary information." … more
Michael Moore Inadvertently Makes Case Against Film Subsidies (Again)
Rick Lowe of the Nassau Institute posted a blog entry April 3 about his experience with a group gathered near his home in the Bahamas to watch and discuss Michael Moore's latest film, "Capitalism: A Love Story." … more
MEGA Marks 15th Anniversary
Yesterday marked the 15th anniversary of the creation of the Michigan Economic Growth Authority, a business-tax credit and subsidy program designed to create new and keep existing jobs in the state. The Mackinac Center has published two rigorous analyses of MEGA: "MEGA: A Retrospective Assessment" in 2005, and "Michigan Economic Development Corporation: A Review and Analysis" in 2009.
Both studies found that the program had no impact on overall job creation in the state. Another study found that Michigan would have been better off economically if the state had just cut taxes for all businesses instead of operating a targeted tax break program. … more
Both studies found that the program had no impact on overall job creation in the state. Another study found that Michigan would have been better off economically if the state had just cut taxes for all businesses instead of operating a targeted tax break program. … more
Economic Development 'Chicanery'
The recent news that the state's Michigan Economic Growth Authority offered a convicted embezzler's company a $9.1 million tax credit has caused quite a stir in Lansing. Last week, legislators held hearings on how the Michigan Economic Development Corp., MEGA's parent agency, could have let someone with the embezzler's background be part of a multi-million-dollar selective tax break deal.
There is so much money sloshing around economic development programs around the nation — up to $50 billion or so as late as 2004 — that it would be surprising if there were not many questionable deals brokered by similar agencies across the nation. … more
There is so much money sloshing around economic development programs around the nation — up to $50 billion or so as late as 2004 — that it would be surprising if there were not many questionable deals brokered by similar agencies across the nation. … more
A MEGA Blast From the Past
How deep does this hole have to get before the people demand that the political class finally turn its back on what are now clearly recognized are not "economic development" programs but a self-serving political development agenda? … more
MEGA Cliché 'Mistakes Were Made' Not Good Enough
In her first public statements since it was revealed that the Michigan Economic Growth Authority approved a $9.1 million tax credit deal for a convicted embezzler, Gov. Jennifer Granholm was quoted by the Gongwer Michigan Report as saying, "And obviously, a mistake was made, and it cannot happen again." … more
MEGA Prescient
The parole violation arrest last week of convicted embezzler and Michigan Economic Growth Authority tax credit winner Richard A. Short has caused deep embarrassment for state officials. But for me it has occasioned some poignant reflection on two former colleagues, Martin M. Wing, Ph.D, and Joseph P. Overton, who co-authored the Mackinac Center's first MEGA study in 1995, with a third scholar, before the program even became law. … more
MEGA Show Trial?
The Michigan House and Senate plan to hold hearings this week on how a convicted embezzler on parole duped the Michigan Economic Development Corp. and Michigan Economic Growth Authority into offering his company — which was being run out of a Flint mobile home park — a $9.1 million tax credit. (This could have become a "refundable" credit, meaning the state would likely be writing checks to the embezzler.) … more
This Just In: Convicted Embezzler's Business Awarded State Tax Subsidy
The Associated Press is reporting that a convicted embezzler currently on parole has been approved for business tax credits under the state's Michigan Economic Growth Authority program. The article also noted that when the deal was announced, the embezzler, Richard A. Short, "shared the stage" with Gov. Jennifer Granholm.
Had the program managers performed even a cursory background check, they certainly would have discovered Short's past. … more
Had the program managers performed even a cursory background check, they certainly would have discovered Short's past. … more
Governor Offers $2.1 Billion Toast to Health of Government
Last week, Gov. Jennifer Granholm introduced the final budget of her tenure. She proposes spending $2.1 billion more than the current year, and requests a $554 million net tax increase for fiscal 2011. The tax hike comes from immediately increasing the tax burden on consumers by expanding the sales tax to services, while gradually implementing a reduction in business taxes.
This net tax hike would ensure the health of state government at the expense of families and business owners. … more
This net tax hike would ensure the health of state government at the expense of families and business owners. … more
State of the Statists
Gov. Jennifer Granholm gives her last State of the State speech tonight.
Mackinac Center analysts have reviewed each State of the State speech dating back to 1969 and tallied the number of proposed expansions and limitations of government that each governor has offered. The "scorecard" of proposals below provides some insight into each administration's desire to see government solve perceived public policy problems.
These counts are not an exact science, but determining whether a proposal expands or limits state government is usually not too difficult.
Below is a set of historical averages covering the administrations of Governors William Milliken, James Blanchard, John Engler and Jennifer Granholm. … more
Mackinac Center analysts have reviewed each State of the State speech dating back to 1969 and tallied the number of proposed expansions and limitations of government that each governor has offered. The "scorecard" of proposals below provides some insight into each administration's desire to see government solve perceived public policy problems.
These counts are not an exact science, but determining whether a proposal expands or limits state government is usually not too difficult.
Below is a set of historical averages covering the administrations of Governors William Milliken, James Blanchard, John Engler and Jennifer Granholm. … more
