For a decade, Michigan watched its jobs and people leave.
Stifled by high taxes and over-regulation, long-time businesses folded or headed for greener pastures, and new employers and investors passed the state by for more welcoming locales. More of its college graduates took their diplomas elsewhere than stayed in Michigan.
The impact of that Lost Decade is still evident. Michigan went from one of the most prosperous states in the nation to one of the least so; household incomes plummeted and tax revenue fell. The state was unable to make critical investments in its foundation, and so schools and roads became the worst in the country.
Desperate, angry voters in 2010 swept into office Gov. Rick Snyder and a Republican Legislature to change that. And they did.
In his first term, Snyder cut business taxes to levels competitive with the faster growing states, slashed the regulatory regime and hung up a WELCOME sign for job creators.
The result is a growing economy, a jobless rate that finally matches the national average and improved rankings in nearly every business climate survey. More of our children are staying home, and many are returning.
So what do the Democrats who piloted Michigan during those bleak years want to do? Reinstate the policies that ruined Michigan. They never learn.
The Democratic idea for raising money to fund road work is to restore the old job-choking tax rates on business. They’re also pushing for energy policies that will limit power production and drive up the cost of electricity. And they’re even rallying support for bringing a graduated income tax to Michigan.
Michigan is just one of seven states with a flat income tax. That should not be seen as a problem that needs fixing. Rather, it’s an advantage to exploit.
The Laffer Center reports that between 2001 and 2010, the nine states with no income tax had a 14 percent population growth, compared to a nationwide average of 9 percent and 5.5 percent for the highest tax states. Job growth in those nine states averaged 5.5 percent during the period, compared to near 0 percent for the rest of the country.
If Michigan can’t get rid of its income tax altogether, the last thing it should do is join the states with income tax rates structured to drive out investors and discourage entrepreneurship. California, with the highest state taxes, lost 1.5 million people between 2000 and 2010, while no-income tax Texas gained 870,000.
Michigan is in the process of reinventing its image based on the significant pro-business policy shifts it put in place over the past five years. And it’s working.
“The changes have given business confidence in the direction and future of the state,” says Doug Rothwell, chief executive of Business Leaders for Michigan. “Business covets certainty and consistency. The view now is that Michigan is a good place to invest money.”
Go back to the old policies, start thinking the state can solve all its fiscal problems by soaking the rich and squeezing business, and the old attitudes about Michigan as a place for job creators to avoid will return.
We’ve seen what that looks like.
Follow Nolan Finley at detroitnews.com/finley, on Twitter at @nolanfinleydn, on Facebook at nolanfinleydetnews.