Snyder's three card monty

Last week Governor Snyder signed into law a restructuring of the tax code giving a massive cut to businesses. Republicans are praising the move as they believe it will bring companies to Michigan and create jobs. The move changes Michigan's standing in the nation from 19th in business tax burden to 35th. While this is an improvement it falls well short of driving companies to Michigan. If you had the choice between 50 different mortgage rates would you choose the 15th best rate? At best this will drive a small number of companies in bordering states to Michigan.

The good news is that by electing Rick Snyder we elected a smart business man who excels at analyzing the situation and compiling data to maximize the value of every tax dollar. After what I assume was exhaustive research into the topic the Governor had this to say about the return on investment Michigan can expect to see with these business tax cuts "Can we quantify all the numbers (of jobs created)? No. But we know it's going to happen."

So I guess the Governor has decided using business techniques in political office is too burdensome and he has chosen to run the Governors office more like Jim Leyland would - using his gut to guide him.

Given that the Governor has not shown any interest in putting some numbers to his proposal I did a little research to see what $1.7 billion in tax cuts gets you. According to the Center for American Progress tax cuts result in 1 job for every $137,000 in cuts. This means at a cost of $1.7 billion the Governor's tax cuts will create around 12,400 new jobs over the next year. The reason for the low return on investment is that companies are in business to make money not create jobs.

12,000 new jobs doesn't sound too bad. The problem is that over the last year we have lost 19,000 public sector jobs due to lost tax revenue and that number will certainly increase once the Governors new cuts go into affect. Maybe the goal is to eliminate those vile public sector jobs like policemen, firefighters and teachers and slowly replace them with private sector jobs. If so, this tax cut is spot on.

Michigan residents and businesses have already seen massive tax cuts over the last few years thanks to the drop in house and commercial building values and the subsequent drop in property tax.

A government worker pays taxes just like anyone else in the state so lowering taxes to the point of massive public sector job loss is counter productive. These cuts are a policy of job shifting not job creation. My guess is the Governor isn't promising to create jobs not because he hasn't looked at all of the data, but because he has.