Gov. Gretchen Whitmer says that she is reducing costs for Michigan residents, but the impact of her policies does not back up that claim. “I’m laser-focused on lower costs,” Whitmer tweeted recently, “and making life a little easier for every Michigander.”
But the governor’s actions are not reducing prices. Instead, they are passing costs from some taxpayers to others.
Over the past year, Whitmer has signed laws that give tax credits to individuals below a certain income level, spend $257 million on Pre-K for all four-year-olds, and pay $70 million for associate’s degrees at community colleges. These initiatives have not lowered costs. They have redistributed money from taxpayers.
Through Michigan Reconnect, where adults age 21 and older can apply for free associate’s degrees at a community college, the state legislature reallocates money from the state budget to pay the cost of tuition, pulling funding from income and sales taxes. Tuition that would typically be paid for by the student and his or her family is now covered by state funds collected from taxpayers. The cost of tuition is the same, but the burden of payment has been passed on to taxpayers. The program reallocates wealth. It doesn’t lower costs.
Extending $257 million toward Pre-K has the same effect. Poorer and even some middle-class households are already eligible for government-paid preschool. Whitmer extended subsidies to wealthy households who have preschool-aged children. As with Michigan Reconnect, nothing is done to lower the price of preschool. Wealthier households shift the cost of Pre-K to the taxpayer.
Redistributing wealth and lowering costs are fundamentally different. Redistribution involves moving resources from one group to another. Lowering costs, on the other hand, involves reducing the prices that individuals and families face. Lower prices don’t discriminate; they allow all of us to stretch our dollars further. One does not have to be “eligible” to benefit from lower costs.
Transferring the costs from taxpayers to beneficiaries is not cost-free. Lawmakers could afford to let people keep more of their own money if they were not redistributing it to college students, wealthy families with preschool children, and the other groups Whitmer favors. Government assesses real costs on people through taxes and regulation, and those are costs she could do something about.
If Whitmer truly seeks to fulfill her promise to Michigan, the best solution would be to reduce the prices that are under her control. State government assesses taxes, imposes fees, and raises costs through state rules. Whitmer claims that she’s lowering costs when she’s really transferring the costs from taxpayers to her favored groups. If the goal is to redistribute wealth, it should be presented as such.
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