A stronger Michigan economy is within reach

Added June 25th, 2014 by Karen Holcomb-Merrill | Email This Entry Email This Entry
Karen Holcomb-Merrill

Yes we can grow Michigan’s economy, create good jobs and expand opportunities for all Michiganians with the right public policy decisions. A new report by Erica Williams at the Center on Budget and Policy Priorities outlines how policymakers can make that happen.

Williams explains that states need to invest adequately in education, healthcare, transportation and workforce development. And in order to do that, they need to make decisions about how to raise and spend revenues with an eye toward the future.

These investment strategies are particularly important and timely here in Michigan. The Legislature just completed its budget for the next fiscal year, which starts Oct. 1. While there are some significant restorations of funding and new funding to support education and services, this comes on the heels of a decade of disinvestment.

But as noted in this paper, we have a long way to go in our state.

Michigan must invest in the services and infrastructure needed to create jobs and fuel economic growth, including effective public schools, community colleges and universities; healthcare services needed to ensure healthy children and workers; roads, bridges and public transportation needed to attract businesses; police and firefighters; and the libraries, parks and other community services needed to attract and retain a well-trained workforce.

But it’s not just about reinvesting, it is also about having the adequate revenues to do so.

Williams notes:

“Strong revenue growth would help states restore school funding, rebuild budget reserves, and invest in the future, but states’ antiquated tax systems are ill-suited to raising adequate revenue in a 21st century economy. For instance, many states primarily levy sales taxes on tangible goods, even though services — many of which, such as video streaming services, didn’t exist when sales taxes were first enacted — make up a growing share of consumption. States can halt the erosion of their sales tax systems, thereby improving their long-term ability to invest in state priorities, by broadening the sales tax base to include more services.”

Michigan is one of those states that continue to rely heavily on taxing goods rather than services. A key piece of improving Michigan’s tax system must include extending the sales tax to services.

The Center on Budget and Policy Priorities’ report also highlights the importance of focused tax increases as part of an overall strategy to grow the economy and create jobs. Tax increases on high-income individuals and profitable corporations — those best able to afford the increase and least likely to substantially reduce spending as a result — must be part of that equation.

Michigan has taken a different approach, shifting taxes from businesses on to individuals, particularly low- and moderate-income people.  This is the wrong approach. One easy way to start to address this would be to restore Michigan’s Earned Income Tax Credit for low-income working families.

We know what it takes to grow Michigan’s economy, create good jobs and expand opportunities. It’s up to policymakers to do their part to make that happen.

— Karen Holcomb-Merrill

 

 

One Response to “A stronger Michigan economy is within reach”

  1. […] and other services in contrast to Michigan’s tax cut and disinvestment strategy. Also, the Center on Budget and Policy Priorities last week outlined steps for states to take to improve their […]

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