Go Bold or Stay Behind

You might be asking, "Why should Michigan become the only state that says 'No!' to the taxation of businesses?". When Michigan scrapped its Single Business Tax, it was on its way to becoming that. Our state government seems to be obsessed with where Michigan falls compared to other states on the many lists of 50 that are generated. When they realized that failing to replace the SBT with other business taxes would put Michigan at the bottom of the list of tax revenues from businesses, they freaked out. They did not analyze whether that would be good or bad for the society of Michigan. They did not analyze whether that would help the society of Michigan to become more economically competitive. You can make all kinds of guesses as to why they were concerned with dropping to the bottom of the list of business tax revenues, but since they didn't do the analysis that matters most - the analysis of what impact it would have on the viability of Michigan's economy - it really doesn't matter why. What matters is what we can do to get them to refocus on what really matters.

Our Governor has sent out her spinners to point out that Michigan is "in the mainstream" on many tax and spending policies, as if where we are relative to other states on those policies is more important than where we are relative to other states on economic growth, unemployment, population migration and other measures of economic viability. Those measures scream the message that Michigan is failing to compete and is adversely impacting the economy of the entire US as a result. Apparently, the fact that we are in a leaky boat with nobody rowing and with the rudder stuck in the hard'a'port position is less significant to people in Lansing than the fact that our control policies position us in the middle of the pack.

This does not bode well for economic recovery and this is why we have to resort to the most powerful check on government power. That check is investor power. If investors say "No!" to the enablement of productivity, there will be no productivity and government power will evaporate as the productive members of our society head for greener pastures leaving only the people who sit like baby birds with wide open mouths - waiting for mama bird to stuff something fat and juicy in. When there is no longer anything fat and juicy to stuff in, the importance of paying attention to economic fundamentals will become more clear. The most important economic fundamental is that investors have power and they will exercise that power elsewhere if the potential for reward is limited by government over-control.

So back to the original question, "Why should Michigan become the only state that says 'No!' to the taxation of businesses?". Let's rephrase that question. "Why should investors help Michigan to become the first state in the modern era to say 'No!' to taxation of capital?" There are several answers to that, but the most important is that it will be in the best interests of everyone in the world. We all benefit from competition. It helps us to be better prepared for whatever the future brings.

Sooner or later, some state will find its economy in trouble and will recognize that it needs to help its businesses become more competitive. Furthermore, eventually one of these will recognize that broad-based reform works better than government managed pick-and-choose sweetheart deals for targeted businesses. Finally the success of those reforms will cause the other states to go down the same road. Michigan is in the position that Ireland was in within the European Union when Ireland chose to drastically cut corporate income taxation. The result in Ireland was called, "the Irish Miracle".

Michigan is in the position that British Columbia was in when socialists came to power there and caused an economic collapse. BC's response was broad-based tax and spending cuts that put more money in the hands of both investors and consumers in BC. BC's economy turned around quickly.

Michigan is in a position to draw the logical conclusion from those two examples and leapfrog to the bottom of the business tax revenue list and to the top of the economic opportunity list. We just need help from investors to push us to the logical conclusion. Boycotting Michigan's misguided government control of capital is easy and in your long term best interest as well as ours.

So, hold onto your investment dollars or put them to use in places where they will not be subject to confiscation at the whims of the people who are addicted to the belief that they deserve a share of the profits without a share of the risks. You will know that the time has arrived when there is capitulation by the voters of Michigan. It won't be sufficient for Michigan to become a right-to-work state or to spend more on education or to offer you a sweetheart deal on future taxes. Michigan needs broad-based tax reform that takes the target off the backs of investors and workers. When the Constitution of the State of Michigan has a clause that says "Hands off the capital", then Michigan will be the place where your money will do us and you the most good.