Tax Cuts Won’t Grow the Economy, Could Further Drain School Funding

Tax Cuts Won’t Grow the Economy | Michigan League for Public Policy



Income tax cuts lock in deep and harmful cuts in education and other public services. Over the last decade—even before the Great Recession—Michigan budget and tax policies resulted in deep cuts in the public services and structures that are the foundation of economic opportunity and growth. To gamble on a personal income tax cut—despite the evidence that tax cuts do little to boost the economy—puts basic public services at risk, and undermines Michigan’s fledgling economic recovery.



Reinvesting in public education is at the top of Michigan’s to-do list. Overwhelmingly, high-wage states are states with well-educated workforces, in part because a pool of well-educated workers attracts high-wage employers.(9)



There are many ways to improve workforce skills in Michigan, including increasing access to postsecondary education, reducing high-school drop-out rates, moving people without high school degrees through GED and associate degree programs, increasing the quality of K-12 education, and offering preschool and family support programs for parents of young children.(10)



Unfortunately, the reality in Michigan is that:



Fifty-five school districts across the state are grappling with deficits. In the decade between 2003 and 2013, the minimum per-pupil foundation allowance for K-12 public schools increased by only 4%, in the face of a 21% increase in inflation.(11)  State funding for K-12 education fell by over 20% between Fiscal Years 2004 and 2013 when inflation is taken account.



Michigan lags behind other states in education spending. A national report found that the state is spending $572 per student less than it did in 2008, a 9% cut (adjusted for inflation), putting it behind 33 other states that cut less, or invested more, in education.(12)



(9)  Berger, N. and Fisher, P., A Well-Educated Workforce is Key to State Prosperity, Economic Analysis and Research Network (August 22, 2013). 

(10) Ibid. 

(11) K-12 Schools Minimum Foundation Allowance, Senate Fiscal Agency (updated September 18, 2012). 

(12) Leachman, M., and Mai, C., Most States Funding Schools Less Than Before the Recession, Center on Budget and Policy Priorities (September 12, 2013).