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An orchestrated campaign for "tax restructuring" — a euphemism for a tax increase — advanced by the governor, legislators, editorial writers, union officials, academics and others has been hampered by a reality-based, multiple-front assault led by Michael LaFaive and James Hohman of the Mackinac Center's Morey Fiscal Policy Initiative.
Knowing that a tax increase in the middle of a recession would be extremely unpopular given politicians' assurances that the last tax increase would resolve state budget problems, tax hike supporters sought a new approach to maintain state spending levels. They found it in a spurious claim that Michigan's tax structure is outdated and fails to capture adequate revenue. By "restructuring," supporters claimed, the state could better capture taxes while remaining revenue neutral.
Hohman, the Center's fiscal policy analyst, put the lie to this argument in a Detroit Free Press Op-Ed, numerous posts on the Mackinac Center blog and published Viewpoints. Using statistics, graphs and analysis, Hohman pointed out that Michigan is capturing tax revenue at a more effective rate than 34 other states, even with our bottom-dwelling economy.
Fiscal Policy Director LaFaive also undermined arguments for a tax hike through his annual analysis of the governor's State of the State address, numerous interviews and at least a dozen speeches throughout the state.
LaFaive, Hohman and Senior Director of Communications Michael Jahr analyzed the governor's annual address on Feb. 4 and produced the Center's annual count of the proposed expansions or limitations of state government. Mackinac Center staff has tallied such proposals in each governor's annual address going back to 1969. This year's count included eight expansions and three limitations. While the number of expansions was lower than usual, it was not enough to offset Gov. Jennifer Granholm's eight-year record for total proposed expansions of state government.
As part of another annual tradition, LaFaive presented a shadow "State of the State" speech at the University of Detroit Mercy in early February, laying out Michigan's economic track record and some policy recommendations for more than 225 audience members. In late February, LaFaive delivered an economic development talk to 27 members of the House Republican Caucus. Center Policy Analyst Ken Braun on Feb. 8 discussed the State of the State address and budget issues as part of a panel on WXYZ-TV's Spotlight in the News.
LaFaive was even cited in a column where Stephen Henderson, editorial page editor of the Detroit Free Press, argued that President Barack Obama should "put a substantial tax cut on the national agenda" during his State of the Union speech.
The Center's unrelenting focus on the 2011 budget process, the projected $1.7 billion overspending crisis and Gov. Granholm's proposed $900 million-plus tax hike proposal was not popular with everyone. During a Feb. 12 interview on WJR, Gov. Granholm was promoting her tax proposal, citing "expert" support and stating that "we have to modernize this darn tax structure." When talk host Paul W. Smith began a question with "Speaking of experts, Michael D. LaFaive, the Mackinac Center's director...," the governor seemed to audibly scoff. "Why are you quoting those guys?" she asked with derision. "I think they make some good sense," Smith replied.
Four years ago, the Center received a generous $1 million gift from the Morey Foundation of Winn, Mich., for the express purpose of expanding the Center's fiscal policy reach.
