On June 28, 2007, the Michigan Legislature voted to create the Michigan Business Tax, a replacement for the state’s Single Business Tax, the main tax on Michigan businesses. On July 12, 2007, Gov. Granholm signed the MBT into law.

The SBT had been ranked by the Tax Foundation of Washington, D.C., as the most economically damaging corporate income tax levied by any state in the nation. A citizen-initiated law that passed the Legislature last summer called upon lawmakers to repeal and replace it with a new tax that is "less burdensome and less costly to employers, more equitable, and more conducive to job creation and investment."

But Mackinac Center Policy Analyst Kenneth M. Braun observes that the politicians who created the MBT failed to accomplish any of these tax-reform goals. Noting that the Michigan Chamber of Commerce had identified 30 flaws in the MBT and opposed passage of it, Braun wrote in an August Mackinac Center Viewpoint, "[A] tax that was supposed to be ‘less burdensome’ for employers appears to be filled with flaws and is so complex that one of the state’s largest and most knowledgeable business advocates is still trying to untangle it."

While Lansing politicians predict that the MBT will put the state on the "path to economic recovery" and that it signals Michigan is "open for business," Braun noted that the MBT really just provides tax cuts for some businesses by hiking taxes on others. He added that there is a legitimate concern that the whole thing may be a net tax increase compared to the old SBT, which already took in $1.9 billion per year. "Rather than an investment-friendly and equitable tax," he observed, "this is a disruptive and complicated government game that pits the interests of some industries against others."

Examining the SBT’s impact on the Michigan economy, the Mackinac Center has concluded that the state would benefit from a far less costly replacement — an actual tax cut — and that the ideal course of action would have been to kill the tax and not replace it at all. "Of the three major state taxes — personal income tax, corporate income tax and sales tax — the states that have consistently eaten Michigan’s lunch are those with only one or two such taxes, not all three,"
David L. Littmann, the Mackinac Center’s senior economist recently noted.

Braun has investigated what has happened in the states that don’t have a corporate income tax and concluded that Michigan would have done well to heed their example. "If our job growth had paced the three states that have no general corporate tax at all," wrote Braun, "then the additional [annual] income and sales taxes would be more than $3.2 billion — making up all of the ‘lost’ SBT revenue and tacking on an extra $1.3 billion."

Nor is it clear that state government needs the revenue collected by its main business tax. Michael D. LaFaive, the Mackinac Center’s director of fiscal policy, examined a recent state budget and found several billion dollars worth of spending that could be reduced. Two examples of his recommendations are contracting state police road patrols out to less costly local sheriffs’ departments and selling assets that the state should not own in the first place.

LaFaive’s state budget study may be read in its entirety at www.mackinac.org/6545, and Littmann’s commentary on the state economy is available at www.mackinac.org/7601. Braun’s description of the MBT may be read at www.mackinac.org/8809, and his look at job growth in the states that do not impose a corporate income tax is available at www.mackinac.org/8112.

The term "politician" isn’t a popular one, even with politicians. Most people would agree that to be labeled a "statesman" is a much higher compliment — and that we need fewer of the former and more of the latter. There’s a general sense that statesmen lift us up, while politicians let us down. This column will seek to foster a climate which will produce more statesmen and fewer politicians, so let’s begin with some observations about what distinguishes one from the other.

Statesmen are a big cut above politicians, who seek office for thrills or for power or because they like the attention it brings them. Some politicians are better than others, but statesmen rise above mere politics, that meat grinder of principles. The clever politician knows how to manipulate power for personal advantage, but the statesman’s allegiance is to loftier objectives.

Statesmen don’t seek public office for personal gain or attention. Like George Washington, they often are people who take time out from productive careers of accomplishment to temporarily serve the public. They don’t have to work for government because that’s all they know how to do. They stand for a principled vision, not for what they think citizens will fall for. When a statesman gets elected, he doesn’t forget the public-spirited citizens who sent him to office and become a mouthpiece for the permanent bureaucracy or some special interest that greased his campaign.

Because they seek the truth, statesmen are more likely to do what’s right than what may be politically popular at the moment. You know where they stand because they say what they mean and they mean what they say. They do not engage in class warfare, race-baiting or in other divisive or partisan tactics that pull people apart. They do not buy votes with tax dollars. They don’t make promises they can’t keep or intend to break. They take responsibility for their actions. A statesman doesn’t try to pull himself up by dragging somebody else down, and he doesn’t try to convince people they’re victims just so he can posture as their savior.

When it comes to managing public finances, statesmen prioritize. They don’t behave as though government deserves an endlessly larger share of other people’s money. They exhibit the courage to cut less important expenses to make way for more pressing ones. They don’t try to build empires. Instead, they keep government within its proper bounds and trust in what free and enterprising people can accomplish. Politicians think that they’re smart enough to plan other people’s lives; statesmen are wise enough to understand what utter folly such arrogant attitudes really are.

Have you ever felt that in spite of a long campaign and lots of speeches, you learned essentially nothing from a particular candidate? That one was a politician. I prefer the statesman: the man or woman of substance who, win or lose, had the courage to lay it out straight.

Politicians are characters, but statesmen have character. A statesman is a man or woman of integrity, honesty and candor. You actually learn something good from what he says and how he conducts himself. When a politician leaves office, he’s largely forgotten. When a statesman departs, we know we’ve lost something.

Michigan doesn’t suffer from a shortage of politicians. First and foremost, it needs a citizenry that is vigilant about the nature of government and its proper role in a free society of responsible adults. That’s the sort of citizenry that then has the wisdom to produce statesmen.