Granholm the Tax Cutter?

Fresh off being the governor of the state that led the nation with the highest unemployment for 49 consecutive months, former Michigan Gov. Jennifer Granholm wrote an op-ed piece for the Huffington Post about how she thought the United States could create jobs. And now, Granholm is portraying herself as an expert on tax cuts and declaring that Milton Friedman, Adam Smith and Ronald Reagan were wrong about economics:

… I also cut taxes 99 times (small and large) in the first 4.5 years of my terms in the hope that Friedman/Adam Smith/Reagan were right. They were not. We still had the highest unemployment rate in the country. Enough of that experiment. Let’s move to what we know works. … This is what people must learn from Michigan’s laboratory of democracy: laissez-faire trickle-down theory might have been a fine strategy last century. But in a global economy our economic competitors are playing a much more aggressive, hands-on game. We’ve got to do the same: invest and grow rather than cut and lose.

Granholm was responding to a blog post by Lou Glazer, president of Michigan Future Inc., a nonprofit organization that hopes to turn Michigan into a “world class community in a knowledge-driven economy.” 

But James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy, said Granholm’s record on tax cuts is hardly how she portrays it. He took a look at the major taxes that accounted for $20 billion of the $26 billion in state resources and found no evidence of tax cuts by Granholm.

The income tax was decreased from 4.2 percent in 2000 to 4.0 percent in 2003, and then fell to 3.9 in 2004. But those changes were due to policies enacted while previous Gov. John Engler was in office. Granholm raised the income tax rate to 4.35 percent in 2007.

Meanwhile, liquor, beer, wine, sales and “use tax” rates all were untouched during Granholm’s two terms.

The business tax rate went up in 2007 because of the 22 percent surcharge tacked on top of the Michigan Business Tax. And in 2004, the tax on tobacco was increased from $1.25 a pack to $2 a pack, according to Hohman.

“The income tax and business tax hikes were substantial increases,” Hohman said. “The governor does not have any tax-cut credibility.”