The new Pew Center on the States report mentioned elsewhere on this page echoes a claim frequently made by government spending interests seeking a tax increase here, that Michigan's tax system is "out of sync" with the current economy, and needs to be "restructured" in ways that ensure more steady (and larger) extraction of revenues.
However, the facts do not support this view. In the current recession, despite having the worst economy in the nation, Michigan's tax revenues have fallen less than those in 31 other states, when measured in relation to state employment and personal income declines.
Total Michigan employment fell 9.4 percent from December 2007 to June 2009, and tax revenues here are down 11 percent. In contrast, the average job loss for all states is 4.7 percent, and the average decline in state tax revenue is 15 percent.
In addition, over the past three years, Michigan tax revenues have been consuming an increasing percentage of state personal income.
In other words, when it comes to extracting revenue from a declining tax base, Michigan has been taking a larger proportion of the population's wealth and income, not less. It's also been "outcompeting" other states in this regard.
If our tax system is "out of sync" with the 21st century economy, the imbalance is on the side of the government.
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