A Single-State Recession
Acton Institute Powerblog

A Single-State Recession

The number of jobs (nonfarm, not seasonally-adjusted) added to the US economy since 2004 numbers around 6 million.

But over the same period, Michigan has lost over 50,000 jobs. What’s going on?

A relative of mine recently described to me the situation from his perspective. His company has an office located in Michigan, and of the rather modest net profits accrued by the Michigan location, over 56% were paid to the state by means of the Single Business Tax (SBT).

The SBT has now been phased out going forward, but there’s been a huge partisan battle between Republicans in the state congress and Democratic Governor Jennifer Granholm about what to do. The debates are well-chronicled on the Democratic side by the ranking Democrat on the Senate Appropriations Committee, Senator Mickey Switalski (see, for instance, the Feb. 23, 2007 edition of his newsletter, The Insider).

It looks now like the new tax policy replacing the SBT will be “revenue neutral,” in large part because the state was already facing a $1 billion budget deficit before the SBT was to be phased out. Besides the punitive SBT, many blame the employment climate in Michigan on the state’s “heavily unionized culture.”

The “revenue neutral” nature of the new tax plan seems to indicate to me that businesses in Michigan can continue to expect big chunks of their profits going to the state’s coffers. And that can only mean that Michigan’s single-state recession will continue, even if the tax penalty for adding payroll is modified under the new plan.

Jordan J. Ballor

Jordan J. Ballor (Dr. theol., University of Zurich; Ph.D., Calvin Theological Seminary) is director of research at the Center for Religion, Culture & Democracy, an initiative of the First Liberty Institute. He has previously held research positions at the Acton Institute and Vrije Universiteit Amsterdam, and has authored multiple books, including a forthcoming introduction to the public theology of Abraham Kuyper. Working with Lexham Press, he served as a general editor for the 12 volume Abraham Kuyper Collected Works in Public Theology series, and his research can be found in publications including Journal of Markets & Morality, Journal of Religion, Scottish Journal of Theology, Reformation & Renaissance Review, Journal of the History of Economic Thought, Faith & Economics, and Calvin Theological Journal. He is also associate director of the Junius Institute for Digital Reformation Research at Calvin Theological Seminary and the Henry Institute for the Study of Christianity & Politics at Calvin University.