An editorial in last Wednesday's Wall Street Journal
slammed Michigan governor Jennifer Granholm's proposed overhaul of the state's single business tax, likening the tax to Europe's VAT and her to Jacques Chirac.
In letter to the editor in today's Journal, Granholm defended her tax-reform proposal.
She called the Journal's characterization of Michigan as a high-tax state "as French-fried as your assertion that [Chirac] is ringing in on our economy."
Then she proceeded to make three points.
First, she denied that Michigan was a high-tax state for business
, citing studies putting Michigan in the middle of the pack for business taxation.
Responding to the editorial, Granholm said that her plan would lower taxes for businesses in every sector, including manufacturing. She added that more than 80 percent of Michigan businesses that will see a tax cut under her plan are not manufacturers, which is why the Small Business Association of Michigan endorsed it.
Second, she defended the revenue-neutral nature of her proposal, saying, "You should not spend money you don't have. I believe in fiscal responsibility." She also pointed out that her plan would end preferential tax treatment for the insurance industry.
Third, she accused the Journal of not understanding Michigan's economy. Because it depends heavily on manufacturing, "we've suffered more than most states from both the economic downturn and federal policies that literally ship good-paying manufacturing jobs overseas."
She also noted that Site Selection magazine ranked the state second in the nation for new corporate facilities and expansions; the state won a Small Business Administration "Best Practice" award for its SmartZone program aimed at creating new technology clusters; and Small Times magazine named Michigan fifth in the nation for "small tech" development.
Her letter concluded:
In Michigan, we are determined to create a solid economic future by strengthening the core industries that made our state great, while embracing the new businesses and industries that will renew that greatness far into the future. My plan is the right way to achieve that goal.