Revive Michigan by repealing income tax--By Mike Cox

Virtually every business, civic and community group recognizes the need to restructure state government. Detroit Renaissance says we need it; Citizens Research Council says we need it; the Detroit Regional Chamber says we need it. I agree, but it is important that we remind ourselves, why restructure?

The answer is simple: Our state is failing. With the loss of 500,000 jobs since 2003, the highest unemployment rate in the country and the loss of 465,000 people since 2001 -- primarily young people with the skills we need for the future -- it is clear that we are falling behind the rest of the nation. To use business terms, we are losing market share to the other 49 states.

As Alan Mulally knows, the ultimate test of Ford's recent moves will be how many Fusions and F-150s it sells. Similarly we must remember that the point of restructuring is to allow us to create a better product -- a state that attracts jobs and people.

So how does our product look to the rest of the country? A recent Tax Foundation study rated Michigan's business tax structure as 48th in country. In other words, we were third from the bottom. Last month, Chief Executive Magazine's fifth annual survey of 543 CEOs asked them to rate their perceptions of the best and worst places to do business in the country. Michigan ranked third worst in the country, trailing New York and California. One chief executive described Michigan as "an absolute regulatory and tax disaster."

If we want to stop losing our children to places like Raleigh, N.C., Chicago and Nashville, we must roll out a new model -- sooner, rather than later. If we want to stop exporting jobs to Virginia, Tennessee and Texas, then we must change our tax structure now. This imperative is not a matter of Republican or Democratic dogma; rather, it is a matter of survival.

Changing our state's perception requires bold action. I propose the Legislature repeal the $700 million increase in personal income taxes signed by the governor in 2007 and cut in half the new $2.6 billion Michigan Business Tax (MBT). Those tax increases hurt our product and our perception. After taxes were raised, unemployment went up, more jobs were lost, and more families and college graduates left Michigan.

This combined $2 billion reduction in taxes would deliver a powerful message to job providers and job seekers that our state has fundamentally changed for the better. Gov. Jennifer Granholm's tax cuts for the film industry last year demonstrated the dynamic power of tax cuts to unleash economic activity and attract jobs to Michigan.

My proposal merely seeks to spread benefits of that tax cut to every Michigan business and citizen. This sweeping reduction in taxes would provide a real stimulus to Michigan's economy immediately. It would throw a desperately needed lifeline to struggling job providers in our state. It would help homeowners and families make ends meet and pay their bills. And overnight it would make Michigan more attractive to companies looking to expand or relocate.

Today, instead of grumbling about taxes, tell the governor and Legislature to take bold action, repeal the income tax increase and cut the business taxes in half. Instead of standing idly by as Michigan descends further into economic decline, let us demonstrate the courage and political will to create a new and economically vibrant Michigan, a state that our children and grandchildren will be proud to call home.

Mike Cox, a Republican, is Michigan's attorney general and is considering running for governor in 2010.