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Report: Tax Cuts Won't Grow the Economy

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Thursday, January 16, 2014   

LANSING, Mich. - When Gov. Rick Snyder delivers his State of the State address today, many Michiganders will be waiting to hear if his plans for the estimated $1 billion budget surplus include tax cuts. However, a new report suggests that's not the way to stimulate the economy.

Karen Holcomb-Merrill, policy director, Michigan League for Public Policy, said across-the-board tax cuts only serve to drain resources from the very programs and services that fuel economic growth.

"A good education system, good strong communities and public safety, good roads and good bridges- that's what we need to grow our economy here in Michigan, not income tax cuts," Holcomb-Merrill said."

The Snyder administration has said it will be critical for lawmakers to use "long-term thinking" when it comes to what should be done with the surplus, and that many proposals are on the table at this point. The full report is available on the Michigan League for Public Policy website, www.mlpp.org.

Holcomb-Merrill said it is misleading to look at the current budget situation as some sort of windfall or jackpot to be handed out, when it is just a one-time scenario in which revenue came in higher than originally projected.

"Because then what we're going to be faced with down the road are deficits again, and the state has experienced a lot of deficits and as a result a lot of cuts to critically important services over the last decade," she explained.

The report also warned that a tax cut would disproportionately benefit the state's wealthiest taxpayers and serve to widen the gap between rich and poor. Over the past decade, Michigan's K-through-12 School Aid fund has been cut by 20 percent, and higher education has been slashed by 37 percent.

The full report is online at www.mlpp.org.




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