A July 14 Wall Street Journal editorial attacking Michigan Gov. Jennifer Granholm (D) exaggerated Michigan's tax burden by falsely claiming that "the Wolverine State ranks fifth both in per-capita terms and as a share of personal income." In fact, in 2004, Michigan ranked 11th in per-person tax revenue and 10th in percentage of personal income going to state taxes, according to the Federation of Tax Administrators, which analyzed data from the U.S. Census Bureau and the Bureau of Economic Analysis.
In addition, the conservative Tax Foundation, which ranks states by their combined state and local tax burdens as a percentage of personal income, placed Michigan taxpayers' burden 22nd nationally. The Tax Foundation's analysis estimates that burden at 10.1 percent.
The difference between being ranked fifth and 10th, 11th, or 22nd is substantial. Per person, the actual fifth-ranked state in 2004, Delaware, collected an average $483 more in taxes per capita than Michigan. As a share of personal income, the fifth-ranked state was New Mexico, whose citizens paid 0.8 percent more in taxes as a percentage of personal income. (Michigan's personal income per capita was $31,954 in 2004, so the Journal's falsehood amounts to overstating the yearly tax burden of a typical Michigan resident by $256.) Counting state and local taxes, the Tax Foundation placed Wisconsin fifth at 11.4 percent, 1.3 percentage points more than Michigan (making the Journal's distortion equal to a $415 portion of Michigan's per-capita income.)
Further, Michigan's relative tax burden has not increased substantially under Granholm's governorship. Since 2002, Republican Gov. John Engler's last full year in office, a $202 increase in Michigan's per-capita tax burden actually decreased Michigan's burden relative to other states from 10th in 2002 to 11th in 2004. A 0.4 percent increase in tax revenue as a percent of personal income dropped the state from 13th to 10th in that category. The Tax Foundation's measure of combined state and local tax burden numbers are also relatively stable, placing Michigan's burden at 10.0 percent in 2002, compared to 10.1 percent in 2004, though this increase propelled Michigan from 29th to 22nd.
From the July 14 Wall Street Journal:
Sorry to say, the facts laid out in Messrs. [Michigan state Rep. Rick] Baxter and [Hillsdale college professor Gary] Wolfram's column and in our previous editorial are well-established. When it comes to high taxes, the Wolverine State ranks fifth both in per-capita terms and as a share of personal income. Michigan also has the nation's highest unemployment rate. There is no shortage of studies that have linked these two phenomena.