A Taxing Question

“Per-Capita Personal Income” is arguably the finest measure of material well-being of a population. The indicator below shows that Michigan’s income levels have been below the U.S. average (the “0” line) for seven consecutive years. In 2006 Michigan’s per-capita personal income was 7.8 percent below the national average. This year, 2008, will mark the eighth year in a row of Michigan's relative poverty — an economic status that is unprecedented in the 75 years since the Great Depression.

These income numbers alone are enough to make a person despair over Michigan’s economic future. Unfortunately, they are not the only ones that paint a picture of a state in decline. Michigan’s per-capita state Gross Domestic Product (the value of all goods and services produced within our borders) has tanked, our unemployment is the highest and the nation and, not surprisingly, from July 2006 to July 2007 Michigan was one of only two states in the nation to lose population in net terms.

While Michigan has many positive attributes, the following rhetorical question must be asked:

Raising the cost of anything only reduces the quantity demanded of it. Raising the cost of living, working and investing in Michigan will only do the same.

David Littmann is senior economist and Michael D. LaFaive is director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the authors and the Center are properly cited.