More and more, progressive business leaders suggest that the whole issue of taxes is a declining factor as CEO's, companies, and talented workers choose where to locate. The increasingly important determinant driving economic development, they say, is quality of life. And that requires targeted public investment in real assets such as schools, transportation infrastructure, the environment, and neighborhoods.Nevertheless, the politicians are determined to cut taxes in Michigan in hopes of making the state more attractive to executives and generate jobs. Governor Granholm's latest plan to modernize the business tax is getting warm reviews, according to a report by the Associated Press. But does the proposal truly seize the opportunity to draft a tax strategy fit for the 21st century?
Michigan currently taxes a company's payroll, which turns out to be a disincentive for doing something positive like growing jobs. No doubt that outdated approach demands fixing. But a key tenet of the Granholm plan is to shift taxation to yet another important economic benefit: profits. That seems backward.
The Great Lakes State should be exploring ways to tax - and thereby discourage - bad things like pollution, waste, and other unsustainable activities that have a detrimental effect on communities and ultimately cost taxpayers - corporate and personal - real money.
Some question whether the Granholm plan would make Michigan competitive in the global economy. Another question is whether the approach inspires cutting-edge innovation and enhances a unique quality of life.
