LANSING – Michigan elected officials should focus on what they can control in the state’s floundering economy and change Michigan’s tax structure, an economist told the House Tax Policy Subcommittee on Tax Restructuring Tuesday.
Testimony by Gary Wolfram, president of the Hillsdale Policy Group, set the stage for further discussions on what the state must do to turn the economy around, said subcommittee chair Rep. Fulton Sheen (R-Plainwell). Sheen said he did not want the subcommittee to meet, create some report and move on, but to debate and provide a substantive change in policy that will bring Michigan in line with the economic recovery witnessed by the rest of the nation.
While Gov. Jennifer Granholm in her State of the State address said Michigan has created 90,000 jobs during her tenure, Wolfram said that because her statistics only look at household survey numbers, typically with a sample size of 1,500-2,000 respondents, that those numbers alone do not show the whole picture.
Numbers used by the state Republican Party, those taken from establishment/payroll surveys with a 15,000 sample size usually, surveys of home sales, state gross domestic product studies and measures of importation/exportation of residents all show a similar job-loss picture, Wolfram said.
December 2005 home sales in the southeastern part of the state showed that homes went for less than they did a year ago and at a slower pace, Wolfram said. At the most recent national homebuilders conference, Michigan was targeted at a state that would be troublesome, he said.
“Will Rogers once said there are lies, there are damned lies and there are statistics,” he said, adding that the governor’s numbers either mean more people are working on farms or starting their own business from home, which he called unrealistic. To his estimate, there most likely have been 50,000-100,000 jobs lost in the state since January of 2003.
States across the Midwest have faired better than Michigan, Wolfram said, citing Indiana where more manufacturing-based jobs exist and there is a lower unemployment rate.
“We have to start bailing water as well as fixing the boat,” he said.
Representatives on both sides of the aisle seemed eager to hear more and start discussions, asking for more information on the per-capita tax burden of other Midwest states, which states support right to work laws and which provide more K-12 funding.
However, Wolfram cautioned against using K-12 spending in the subcommittee’s analysis, saying that a state might spend a larger amount on schools than others but see it used less effectively. Wolfram said members should look at per-unit labor costs because that is partly reflective of the tax burden businesses face and why they may not choose to locate in Michigan.
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