Comerica bank announced last week that it will move its headquarters to Dallas. It was lured there by booming commercial opportunities and nonexistent corporate income taxes. Comerica, founded in Detroit almost 160 years ago, is just the latest in a string of corporations fleeing Michigan’s stagnant economy. With its name plastered on the Detroit Tigers’s downtown stadium and branches across Michigan, Comerica’s decision to move south was a fiscal – and a psychological – blow to the state.

Sarah Royce

Comerica’s move recently garnered the attention of the The Wall Street Journal’s editorial board, which attributed the relocation to Gov. Jennifer Granholm’s proposed tax increases. The editorial sarcastically claims that Granholm “rewarded” supporters with $1 billion in additional taxes – as if Michigan voters expected a prize and were sorely disappointed.

Michigan’s economic situation dominated the 2006 gubernatorial election, and Republican candidate Dick Devos’s tax-slashing mentality was soundly rebuked by the voters. Although tax increases are never popular, voters understand the difficult decisions Granholm is forced to make and recognize that if they want the state to spend on services, that money has to come from somewhere.

In order to close the state’s $860 million budget deficit, Granholm has proposed a 2 percent tax on the broad category of services. She has floated increasing taxes on liquor and cigarettes and will soon announce a reformed business tax. Many critics yearn for the supposed golden days of former Republican Gov. John Engler. But they conveniently overlook the fact that his tax cuts, in large part, led to the severe structural budget crisis our state is experiencing today.

Engler drastically reduced Michigan’s general fund and Granholm inherited the problem, which multiplied exponentially when the technological boom of the 1990s slowed. Engler’s cuts left Michigan unprepared to absorb the sudden punch; it’s foolish to pretend that this is all Granholm’s fault simply because she is the one currently in office. Republicans are now demanding Granholm slash business taxes, but she is responsible for running a government, not just an economy.

The Republican controlled state Senate is preparing to fight an increase in corporate income tax, hoping to attract businesses now. Granholm is taking the less politically advantageous route of ensuring that basic public services can be provided in 2007 and investing in education, which is the only path to a knowledge-based economy and prosperity in the future.

Of course, the future of Michigan is dependent on the economy, but in times of recession, it is even more important that the government be able to fund its welfare and social security programs. Despite warnings from Wall Street that Michigan’s credit rating will be downgraded, Granholm is refusing to run the government like a profit-seeking corporation, and for this she should be commended.

Michigan residents must look at taxes in terms of relative cost and benefit. There are services, like education, that the state can and must provide. According to the Detroit Free Press, the proposed service tax increase would cost a family of four with a income of $57,300 about $65 per year, slightly more than $5 dollars per month – hardly the backbreaker Republicans are ranting about.

Comerica will not be the last company to leave Michigan, and this will not be the last criticism heard from out-of-state pundits who rarely look back beyond a couple of years even while commenting on problems that span decades. For the good of the public, Granholm is trying to strike a balance between a good business environment and a good living environment.

That’s something we can all live with.

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