Michigan's Tax Woes a Warning for Ohio

I shall tread on territory usually occupied by Dave from NixGuy and Tom from BizzyBlog, by pointing out this Wall Street Journal piece that blasts the state of Michigan for taxing and spending themselves to poverty. Here is a taste:

Officials in Lansing reported this month that the state faces a revenue shortfall between $350 million and $550 million next budget year. This is a major embarrassment for Governor Jennifer Granholm, the second-term Democrat who shut down the state government last year until the Legislature approved Michigan's biggest tax hike in a generation. Her tax plan raised the state income tax rate to 4.35% from 3.9%, and increased the state's tax on gross business receipts by 22%. Ms. Granholm argued that these new taxes would raise some $1.3 billion in new revenue that could be "invested" in social spending and new businesses and lead to a Michigan renaissance.

Not quite. Six months later one-third of the expected revenues have vanished as the state's economy continues to struggle. Income tax collections are falling behind estimates, as are property tax receipts and those from the state's transaction tax on home sales.

Michigan is now in the 18th month of a state-wide recession, and the unemployment rate of 6.9% remains far above the national rate of 5%. Ms. Granholm blames the nationwide mortgage meltdown and higher energy prices for the job losses and disappearing revenues, but this Great Lakes state is in its own unique hole. Nearby Illinois (5.4% jobless rate) and even Ohio (5.6%) are doing better.

I bring this up in order to remind everybody what solutions we've been seeing from our friends in Columbus. Gov. T-Shirt Ted decided to pass the savings of a tax hike on to our grandchildren with his bond scheme and Speaker Husted couldn't wait for another photo-op where he could be snapped in an embrace the governor. Essentially, we're trying the opposite of Michigan...and usually that is a good thing...but in this case we're actually trying to spend and tax ourselves in to prosperity. And there are people who actually think that this is a good idea!

The point? Michigan has NEVER done anything worth copying and we should do everything we can do to put us in a situation that reverses the damage in Ohio that Michigan has done to themselves.

We need to reduce taxes for businesses and the people who live here. We need to reduce spending in order to do so. And we need to do all of that soon...unless we want to become Michigan.

UPDATE 1: BizzyBlog weighs in...

UPDATE 2: As expected, NixGuy weighed in too...