Interesting story out of the free market(!) camp.
Michigan has some work to do on the competitiveness of its taxes. But the state still has more strengths than weaknesses, even as it grapples with lackluster job growth.
In the most recent Tax Foundation study on state business tax competitiveness, Michigan ranked 26th. One of the prime reasons Michigan did not finish in the top half of states is its Single Business tax, which remains a flawed 30-year-old experiment that needs to be fixed.
But Michigan is competitive or at least at the median for the majority of our other major taxes, such as personal income, sales and property taxes.
What also has been missed is that Michigan appears to have improved its competitive ranking, moving to 26th from 36th in 2004. There didn't appear to be an improvement when the Tax Foundation released this year's study because it updated its 2004 study and changed the rankings, adjusting for property taxes.
Now the Tax Foundation says Michigan has been in the middle of the pack for business tax climate competitiveness for three straight years.
Corporate profits for Michigan's 80 publicly traded companies in my Michigan Equity stock index are estimated to increase approximately 12 percent in 2006, exceeding forecasted profit gains of the S&P 500 in 2006.
Michigan's ranks in the lower third for state and local employment as a share of total state employment among the 50 states. According to a January Cato Institute update, Michigan's 10.6 percent state and local government employment was below the 11.3 percent average for all states.
Laffer and Associates, an investment firm founded by noted supply-sider Arthur Laffer, ranked Michigan 14th in its October 2005 state competitive environment. Michigan scores well on income incentives and the lack of progressiveness in its tax structure. Michigan has consistently scored well in the Laffer and Associates' annual surveys.
In preliminary estimates for the fourth quarter of 2005, the combination of job and personal income growth for Michigan was 5 percent compared with 7 percent at the national level, a 2-percentage point difference. A year ago, Michigan trailed the national average by more than six percentage points.
Cato and Laffer. I'll be darned.