Feb 052007

LANSING, Mich. — After 15 years of tax cuts, including drops in property and income tax rates, Michigan families have seen their state tax bills decrease by as much as a fourth, according to an Associated Press computer analysis.

The above is from an AP article that seems to have appeared in a lot of newspapers today. I first saw it in today’s Kalamazoo Gazette. It’s the lead article on page 1. Here is a link to the Chicago Tribune version.

The information as to how this “analysis” was performed is pretty scanty. The best I could find was this from something called Michigan Wire.

It’s curious that the AP is now doing analyses like these instead of reporting on other people doing such analyses. Usually the AP is able to achieve a high level of partisanship just by the way it reports on other peoples’ agendas. Apparently that wasn’t enough this time. And it’s suspicious that such an analysis comes out just before the Governor’s State of the State address. Producing a study to serve a political timetable is hardly the way to get objective results.
There are so many things wrong with this, and so many unanswered questions.

Hiding behind the fig leaf “computer analysis” is one of the oldest dodges in the book. There is apparently no web site where one can go to check the data, the assumptions, and the calculations. Just because a computer was used doesn’t mean this piece of work wasn’t ideologically biased.

The article purports to tell how families’ tax bills have dropped over the past 15 years. But in a sidebar that lists tax changes since 1991, there is a list of tax increases (3 of them) followed by a long list of tax cuts. But the latter list includes a cut to the Single Business tax! So how did they calculate the effect of that one in reducing the typical family tax bill?

The article states that “the biggest savings have come through the lower property-tax bills that homeowners have paid since Proposal A passed in 1994.” But I thought the revenues were supposed to be off-set by sales tax receipts. Has that not happened? Are we now spending less per pupil in inflation-adjusted dollars? If so, that would be the story to report on. (Not that it would necessarily be a bad thing, or a good thing. But either way, it would be worth knowing about.)

And if they did somehow make that calculation, where is the information about the indirect effects of changes in the tax rates on economic activity, e.g. on attracting businesses to come to Michigan or leave the state?
And what about the non-school property taxes that are being collected locally? How come those weren’t included in the analysis. Has the reduction in school property taxes made it easier for local governments to raise property taxes for other purposes, as some people predicted would happen? That should have been part of the story, too.

But most of all, I want to know what part of the state GDP is being taken in taxes. Is the government’s percentage of the state’s economy growing or decreasing? Not a word was said about that.

Tom Clay, fo the nonpartisan Citizens Research Council, says policymakers will need to address that question if Michigan is to deal with falling revenues caused in part by lower tax rates.

Note those words, “in part.” But which part? 10 percent? 90 percent? What is the other part that’s not caused by lower tax rates. And what will happen to that other part if tax rates are increased?

I think what’s needed is for some news agency that is a real news agency to do some reporting on this. Find out how the AP really did this study. Find out what motivated it and who the players are behind the scenes. Find out who decided that now was the time for such a study to come out. Find out what the critics have to say about it. Because whatever this story is, it is not a matter of the AP reporting the news. It is a matter of the AP inventing news. And for that kind of work, it should be held to account.