Michigan Problems

Facts about problems with Michigan that do not fit on Michigan Corruption page. Things like:

Compare MI sales tax with other states.
Compare MI income tax with other states.
Compare lack of business tax with other states. (This is bad because there HAS to be a business tax to support other expenses, and no company wants to move here if the coming business tax is not here yet. Companies don't want instability.)
Compare legal system with other states.
Compare divorce system with other states.
Compare zoning laws with other states.

This is not a whine session, this is for high-level facts. For whining go to the related Discussion page for this page.

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General Facts

Population: As of July 1, 2006 the estimated population is 10,095,643.
Michigan is dead last in employment in the US. That means it has the highest unemployment.
Michigan is dead last in business hiring for the US. This is a measurement of the percent of businesses that plan on hiring in the 1st quarter of 2007.

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Business Tax

Michigan recently repealed the "Single Business Tax". Now that we have no business tax, no companies want to relocate here because the situation is unknown. And congress can't decide what to do next.

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Income Tax

Income tax for individuals for 2006 is 3.9%. In 2005 it was 4.2%. In 2004 it was 4.4%.

The following 7 states have no income tax at all: Alaska, Florida, Nevada, S. Dakota, Texas, Washington, Wyoming. There are a few more which tax only interest and dividends.

Most states have multiple income tax brackets. The average low bracket is: 2.64%. The average for the highest brackets is: 6.4%. The average of both brackets is: 4.52%. So Michigan has a slightly lower than average income tax. The highest bracket is 9.5% for Vermont, followed by 9.3% for California.

Sources

http://www.taxadmin.org/FTA/rate/ind_inc.html

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Sales Tax

Current sales tax in MI is 6%.

The following sales tax info is based on the state sales tax. Many cities and counties have their own sales tax which adds on to your purchases.

10 other states have a 6% sales tax rate. The average sales tax in the US is 4.8% so MI has a higher than average sales tax. The highest sales tax rate is California with 7.25%. The median rate is 5%.

Sources

http://www.adai-inc.org/SalesTaxComparison.pdf

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Divorce Law

Current divorce law is no-fault. This means you do not specify a fault when filing divorce papers, nor do you prove fault. If you have a minor child you must file papers with the court, then wait 6 months to try and reconcile. An average divorce costs $2500-3000 (2004 dollars) if everything in the divorce agreement is agreed upon and no extra court time is required. I call this a "fast track" divorce.

Gross child support is calculated starting about $1100 for first child. That is what the non-custodial parent pays if the custodial parent has no income. The child support is divided based on both parents' incomes. Let's assume the wife gets the one kid you had. If you combine both incomes and the wife makes 60% of the income, then the husband pays 40% of $1100 per month in child support.

Friend of the Court helps out the court system by helping to resolve disputes between divorced parents. NC parent (non-custodial) sends child support checks to FOC who then sends a check to the CP (custodial parent). Many cases of "lost" checks abound from 1974 to present. It seems with many cutbacks, and the inability to balance the budget, the state of Michigan is unable to hire honest and reliable employees. Many people report FOC being unhelpful and unreliable.

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Public Schools

All profits from lottery ticket sales are supposed to go to the public schools, but it is not. This helps explain why school funding is dropping. School buildings are severely run down with paint falling on student's heads. Some buildings are closing due to lack of funds (see Grand Rapids Public Schools). A few school systems are being taken over by the state (Flint Public Schools and Detroit Public Schools).

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Unions

Almost all teachers in public schools are in the Teacher's Union. Teachers are highly pressured to be in the union even though there is no law you have to be in it (I researched this). Dues to the union were running about $700 per year (you can deduct them on federal taxes). For a while teachers were getting contract-mandated 2, 3 or 4% raises while the rest of us were getting pay cuts.

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Thoughts

So what makes Michigan so undesirable for business and people alike? We have lower than average income tax, US average=4.52%, Michigan=3.9% for 2006 (does not take into account exemptions), but higher than average sales tax (US average=4.8%, Michigan=6%).

Perhaps it's the laws, or how the laws are implemented. How a law is implemented is just as important as the law itself. Is the law implemented with consistentcy and reasonability? Is it reasonable to send a 19 year old to jail for eating a bagel? (true story) Is it fair to let the son of the prosecutor get his speeding ticket dropped while others have to pay the fine? Is it fair for a boy to get a ticket because he can't avoid Michigan's omnipresent potholes?

Fairness leads to trust. Lack of fairness leads to distrust of the organization. When there is lack of fairness there is lack of trust and people will do less and less to work with the government (or whatever org we are talking about). When corruption sets in, things start to fall apart. It is very likely that corruption plays a big part in Michigan's problems. It's just that people are scared to speak up. They are scared to be punished for saying the truth. But isn't that what you swear in court on a bible? To speak the truth, the whole truth, and nothing but the truth?

Is it fair that only the rich get decent lawyers? (Good public defenders are so overworked, that the good ones just leave.)

So people don't speak up, nothing is done about the corruption, and it just gets worse.

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