impact of freedom-to-work on michigan’s economy
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Impact of Freedom-to-Work on Michigan’s Economy. Robert Genetski ClassicalPrinciples.com 312-565-0112. Organization. I. Economic Freedom & Prosperity II. Economic Freedom & the Wealth of Nations III. Economic Freedom & the Wealth of States Impact of Freedom-to-Work on Michigan - PowerPoint PPT PresentationTRANSCRIPT
Impact of Freedom-to-Work on Michigan’s Economy
Robert GenetskiClassicalPrinciples.com
312-565-0112
Organization
I. Economic Freedom & ProsperityII. Economic Freedom & the Wealth of NationsIII. Economic Freedom & the Wealth of StatesIV. Impact of Freedom-to-Work on MichiganV. Takeaway Points
Classical Economic Principles 1. Low tax rates & limited government 2. Free Markets 3. Protect individual property rights 4. Sound money
I. Economic Freedom & Prosperity
When individuals have economic freedom, both individuals and nations prosper
II. Economic Freedom & the Wealth of Nations
Least Free Third Second Most Free$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000Economic Freedom and Per Capita Income: 2010
Economic Freedom Quartile
Source: Fraser Institute, Economic Freedom of the World: 2012 Annual Report
Economic Freedom Quartile$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000Income of the Poorest 10%: 2010
Least Free Third second most free
Source: Fraser Institute, Economic Freedom of the World: 2012 Annual Report
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20107.6
7.7
7.8
7.9
8.0
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
United States: Economic Freedom Score
score (10 = most freedom)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20101
5
9
13
17
United States Economic Freedom Rank
Source: Fraser Institute; Economic Freedom of the World, 2012 Annual Report
III. Economic Freedom & the Wealth of States
People have an innate desire to live and work where they can have the greatest control over
their lives, income and property.
State Policies to Promote Individual Freedom
– Low or no tax on income– Falling tax burdens relative to other states– Prudent state spending limited to essential
services– Freedom to work without being forced to join a
union and pay dues or fees
States that maximize individual freedom
No individual income tax: AK, FL, NV, SD, TX, WA, WY
Prudent spending limited to essential services: CO
Declining tax burdens relative to other states
Freedom-to-work: AL, AZ, AR, FL, GA, ID, IA, KS, LA, MS, NV, NE, OK, NC, ND, SC, SD, TN, TX, UT, VA, WY
WI, IN, MI
III. Economic Freedom & the Wealth of States
1. Economic Research2. Best and Worst Performing States3. Income taxes & Economic Growth4. Freedom-to-Work & Economic Growth5. Freedom-to-Work & Worker Compensation
III. Economic Freedom & the Wealth of States
1. Economic Research2. Best and Worst Performing States3. Income taxes & Economic Growth4. Freedom-to-Work & Economic Growth5. Freedom-to-Work & Worker Compensation6. Outliers
III. Economic Freedom & the Wealth of States
1. Economic Research2. Best and Worst Performing States3. Income taxes & Economic Growth4. Freedom-to-Work & Economic Growth5. Freedom-to-Work & Worker Compensation6. Outliers
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012100
150
200
250
300
350
400
10 Fastest Growing States Personal Income: 1993-2012
index 1993 = 100
Source: US Census Bureau; BEA; classicalprinciples.com
NVAZ
WY
TXUT
CO
IDNDSD
NM
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012100
150
200
250
300
350
400
10 Fastest Growing States Personal Income: 1993-2012
index 1993 = 100
Source: US Census Bureau; BEA; classicalprinciples.com
NVAZ
WY
TXUT
CO
IDND
SD
NM
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201280
90
100
110
120
State Relative Tax Burdens: 10 Fastest Growing States: 1993-2012
United States Average Tax Burden = 100
percent of US average
Source: US Census Bureau; BEA; classicalprinciples.com
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012100
150
200
250
10 Slowest Growing States Personal Income: 1993-2012
Index: 1993 = 100
Source: US Census Bureau; BEA; classicalprinciples.com
MI
OHHIPA
WVILINRINYCT
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201280
90
100
110
120
State Relative Tax Burdens: 10 Fastest Growing States: 1993-2012
percent of US average
Source: US Census Bureau; BEA; classicalprinciples.com
United States Average Tax Burden = 100
III. Economic Freedom & the Wealth of States
1. Economic Research2. Best and Worst Performing States3. Income taxes & Economic Growth4. Freedom-to-Work & Economic Growth5. Freedom-to-Work & Worker Compensation
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201280
90
100
110
120
State Relative Tax Burdens: 6 States with No Individual Income Tax
thousands of dollars
Source: US Census Bureau; BEA; classicalprinciples.com
FL, NV, SD, TX, WA, WY
United States Average Tax Burden = 100
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122.4
2.5
2.6
2.7
2.8
2.9
3.0
Share of US Personal Income
Percent of US Personal Income
Six States without an Individual Income tax
Source: US Census Bureau; BEA; classicalprinciples.com
III. Economic Freedom & the Wealth of States
1. Economic Research2. Best and Worst Performing States3. Income taxes & Economic Growth4. Freedom-to-Work & Economic Growth5. Freedom-to-Work & Worker Compensation6. Outliers
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201280
90
100
110
120
Relative State Tax Burdens: FTW versus non-FTW States
22 States With Freedom to Work laws
Percent of US average
28 States without Freedom to Work laws
Source: US Census Bureau; BEA; classicalprinciples.com
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201250
55
60
Share of US Personal Income
Percent of US Personal Income
Source: US Census Bureau; BEA; classicalprinciples.com
22 Freedom to Work States relative to 28 non-Freedom to Work States
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201258
63
68Share of US Jobs
percent of jobs (ftw/noftw)
Source: US Census Bureau; BEA; classicalprinciples.com
22 Freedom to Work states relative to28 states without Freedom to Work laws
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012100
110
120
130
140
Job Growth: States with and without Freedom to Work
22 Freedom to Work States
index 1993 = 100
28 States without Freedom to Work laws
Source: US Census Bureau; BEA; classicalprinciples.com
III. Economic Freedom & the Wealth of States
1. Economic Research2. Best and Worst Performing States3. Income taxes & Economic Growth4. Freedom-to-Work & Economic Growth5. Freedom-to-Work & Worker Compensation6. Outliers
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201220
30
40
50Compensation per Worker
22 Freedom to Work States
thousands of dollars
28 States without Freedom to Work laws
Source: US Census Bureau; BEA; classicalprinciples.com
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201220
30
40
50Worker Compensation with Cost of Living
22 Freedom to Work States
thousands of dollars
28 States without Freedom to Work laws
Source: US Census Bureau; BEA; classicalprinciples.com
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201220
30
40
50
Worker Compensation: with Tax & COL
22 Freedom to Work States
thousands of dollars
28 States without Freedom to Work laws
Source: US Census Bureau; BEA; classicalprinciples.com
Economic Freedom & the Wealth of States
Compensation per worker 2011
FTW $42,700No FTW $49,600 16%
FTW COL adj. $44,900 1%No FTW COL adj. $44,400
FTW COL & tax adj. $48,600 19%No FTW COL & tax adj. $40,800
Source: US Census Bureau; BEA; classicalprinciples.com
III. Economic Freedom & the Wealth of States
1. Economic Research2. Best and Worst Performing States3. Income taxes & Economic Growth4. Freedom-to-Work & Economic Growth5. Freedom-to-Work & Worker Compensation6. Outliers
Economic Freedom & the Wealth of States
Examining the behavior of outliers:
1. High performance states without FTW2. Low performance states with FTW3. Oklahoma
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012100
150
200
250
300
350
400
11 Fastest Growing States Personal Income: 1993-2012
index 1993 = 100
Source: US Census Bureau; BEA; classicalprinciples.com
NVAZ
WY
TXUT
CO
IDNDSD
NMWA
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201260
70
80
90
100
110
120
130
140
Relative State Tax Burdens: Leading non-FTW States
Colorado
Percent of US average
Washington
Source: US Census Bureau; BEA; classicalprinciples.com
New Mexico
Economic Freedom & the Wealth of States
Examining the behavior of outliers:
1. High performance states without FTW2. Low performance states with FTW3. Oklahoma
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201280
90
100
110
120
Relative Tax Burdens: Slow Growth FTW States
Alabama
Percent of US average
Source: US Census Bureau; BEA; classicalprinciples.com
KansasIowa
Percent of Union Workers in States with Freedom-to-Work: 2012
• Nevada 14.7%• Iowa 10.4%• Alabama 9.2%• Oklahoma 7.5%• Kansas 6.8%• Avg. other FTW states: 5.0%
Economic Freedom & the Wealth of States
Examining the behavior of outliers:
1. High performance states without FTW2. Low performance states with FTW3. Oklahoma
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201280
90
100
110
120
State Relative Tax Burdens: Oklahoma
Percent of US average
Oklahoma
Source: US Census Bureau; BEA; classicalprinciples.com
Oklahoma Passes Freedom to Work Law
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.98
1.00
1.02
1.04
1.06
1.08
1.10
1.12
Oklahoma's Share of US Personal Income
percent
Source: US Census Bureau; BEA; classicalprinciples.com
Oklahoma Passes Freedom to Work Law
IV. Impact of Freedom-to-Work on Michigan
1.Michigan’s tax burden and performance2. Other FTW states: tax burdens & unions3. Michigan’s progress4. Impact of $1.4 billion tax hike for roads
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201270
80
90
100
110
120
130
Relative State Tax Burden
Percent of US average
Michigan
Source: US Census Bureau; BEA; classicalprinciples.com
US Average State Tax Burden = 100
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122.7
2.9
3.1
3.3
3.5
3.7Michigan's Share of US Personal Income
Percent
Source: US Census Bureau; BEA; classicalprinciples.com
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122.8
3.0
3.2
3.4
3.6
Michigan's Share of US Jobs
Percent
Source: US Census Bureau; BEA; classicalprinciples.com
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012100
110
120
130
140
Job Growth: States with and without Freedom to Work
22 Freedom to Work Statesindex 1993 = 100
28 States without Freedom to Work laws
Source: US Census Bureau; BEA; classicalprinciples.com
Michigan
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201220
30
40
50
Compensation per Worker
United States
thousands of dollars
Michigan: adjusted for COL & Taxes
Source: US Census Bureau; BEA; classicalprinciples.com
Michigan adjusted for COL
US & Michigan Compensation per Employee: 2011
Annual Comp. US average $47,000• MI average 44,200 -6%• MI with COL 46,300 -2%• MI with COL & tax adj. 40,200 -
15%Source: US Census Bureau; BEA; classicalprinciples.com
Michigan Compensation per Employee: 2011
• Sector Annual Comp. Premium• Federal Government $107,000 155%• State & Local 60,000
42%• Private Sector 42,000
Source: US Census Bureau; BEA; classicalprinciples.com
IV. Impact of Freedom-to-Work on Michigan
1.Michigan’s tax burden and performance2. Other FTW states: tax burdens & unions3. Michigan’s progress4. Impact of $1.4 billion tax hike for roads
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201280
90
100
110
120
Relative State Tax Burden
WisconsinPercent of US average
Indiana
Source: US Census Bureau; BEA; classicalprinciples.com
State Tax Burdens & Union Percentage: 2012
Tax Burden Union%
Oklahoma 92% 7.5%Wisconsin 109% 11.2%Indiana 112% 9.1%Michigan 111% 16.6%
IV. Impact of Freedom-to-Work on Michigan
1.Michigan’s tax burden and performance2. Other FTW states: tax burdens & unions3. Michigan’s progress4. Impact of $1.4 billion tax hike for roads
IV. Impact of Freedom-to-Work on Michigan
1.Michigan’s tax burden and performance2. Other FTW states: tax burdens & unions3. Michigan’s progress4. Impact of $1.4 billion tax hike for roads
Impact of Gas Tax on Michigan’s Relative State Tax Burden
2012
• Michigan State Revenues $23.955 billion
• Michigan Relative Tax Burden 111%
• With $1.4 billion tax increase $25.355 billion• Relative Tax Burden with tax 117.5%
V. Takeaway Points
• High-performing states are those that provide individuals with more freedom over their income and job choices – Low or declining tax burdens relative to other states– Limits on growth in the state’s growth in taxes and
spending– Freedom to Work laws States with low or declining
tax burdens tend to outperform those with higher or declining tax burdens
V. Takeaway Points
• Michigan’s needs to make a major effort to reduce its tax burden & state and local spending:– Freedom-to-Work law should help control both
spending and taxes, however more is needed– Taxpayer Bill of Rights Amendment to limit state and
local spending to increases in inflation and population growth
– Combination would provide Michigan workers with more economic freedom than any other state
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Robert Genetski312-565-0112