Gov. Rick Snyder (GOP) and the GOP dominated houses of the Michigan legislature have applied the Chicago School "shock doctrine" to the state's economy. The Chicago School theory isn't worth much, in my view. In most of the South American states where it was applied, it pushed ordinary people deeper into peonage and put down a red carpet for the already propertied, for whose benefit the IMF and World Bank and, often, the US government seem to think an economy exists. Brutal capitalism is the result of the corporatist agenda that claims "free markets" are working for everyone, while the state actually paves the way for multinational corporations to damage ordinary lives (all treated as externalities, oh so sorry) while reaping "rent" profits for managers and shareholders.
But somehow the people of Michigan were bamboozled enough by misuse of the word liberty to think that allowing most businesses to pay no or very little tax, while burdening ordinary people with more taxes, was a fair thing to do.
So on May 25, Snyder signed eight tax bills. The bills treated big business as king--deleting the Michigan business tax even though businesses benefit enormously from highly favorable laws. Now only big corporate businesses will pay any tax and that only at a 6% statutory rate (which amounts to a much lower effective tax rate--practically nothing). At the same time, Michigan made public pensions completely subject to tax--an immediate cut in income for every single retired public employee (who probably gave up singificant wage increases for the promise of retirement benefits), and created a three-tier system whereby retirement income will be subject to a significant tax for baby boomers and later generations (the generation of WWII vets will still enjoy tax free retirement income). It eliminated Michigan's child credit and kept part of the earned income tax credit that the GOP had wanted to eliminate entirely only because of deal-making to get a vote. So the billion-dollar giveaway for big business will be paid for out of the hides of the working poor, public workers and retirees, among others.
Snyder and the GOP-dominated legislature are whistling the same old reaganomics tune that has been proven wrong over and over again--the idea that lowering taxes to businesses will create jobs; that lowering taxes to businesses will spur economic growth; that lowering taxes to businesses will make businesses more "competitive" and therefore provide better pricing structures. Lowering taxes to businesses achieves none of those things. The only thing it does for sure is provide a windfall to business managers (who can pay themselves even higher salaries and bonuses) and shareholders (who can extract even more wealth from productivity gains off the hides of workers). Jobs get created when ordinary people can afford to buy necessities and extras. Jobs don't get created when wealthy people have more wealth that they can't manage to spend.
Of course, the Governor and legislators will have congratulated themselves mightily this week, as they cavorted at the Mackinac Center with big business and many right-wing thinkers. The Mackinac Center is a "free market" pusher--"free" in this case many markets that work for big business, free from the worry of needing to provide adequate compensation to workers, free from the worry of needing to clean up pollution caused by the business, free from the worry of caring about the community in which it is located. "Free" before "market" has nothing to do with individual freedom--workers are told to like it or lump it, to make do on inadequate wages, to pay more of their health costs (while their bosses still get cadillac care), etc. And in many states these days public workers are being told that they cannot join together with their friends and co-workers to form a union, going against the fundamental notion of freedom as a right to associate with whomever one wishes without the state stepping in to interfere.
You can tell that a bill is not good for ordinary people when the Chamber of Commerce likes it. Not surprisingly, Michigan's Chamber of Commerce thinks these bills are humdingers. The president claimed that the "vote moves us one step closer to a simpler and fairer tax code that will improve Michigan's competitive edge in retaining and attracting jobs." See Legislature shows bold leadership in repealing job-killing Michigan business tax, Chamber of Commerce press release. Naturally the Chamber of Commerce claims that the business tax cost thousands of jobs. But in fact taxes don't cost jobs--they create jobs. Because the government spends money, generally in the state, on things that provide jobs in the state--food, transportation, equipment, labor. Whereas wealthy business managers and owners who will benefit from Snyder's giveaway package have no incentive to put their money to work in the state--their investments are fungible and located wherever.
Here's the Governor's Office release on the eight tax bills: Snyder Signs Tax Reform Bills to Fuel State's Turnaround.
For the views of a person who sees inequities quite different from the ones Snyder sees, see Snyder signs tax reform bills deleting Michigan business tax, Yahoo, May 25, 2011.
For the Mackinac Center claim that eliminating the business tax will create 57,000 jobs in one year, see Legislature Passes Snyder's Tax Plan by Narrow Margin, Detroit News