Sunday, February 20, 2011

Mr. Numbers Guy Needs to Re-check His Figures

A lot has been made about Rick Snyder being a CPA and how great that was to have a CPA in charge of Michigan's budget. But it seems like this CPA doesn't understand either basic arithmetic or human behavior.

One of his great ideas for shifting the tax burden in this state from business to working people was to really sock it to the poorest working people he could find by ending the Earned Income Tax Credit. The credit supplements a federal Earned Income Tax Credit for the working poor designed to keep them working and off welfare. It was such a good idea that even Ronald Reagan supported it. And it packs a strong economic punch. For every $1 the state spends on it, it generates $1.67 in economic activity. Nearly every cent is spent right in the state of Michigan. And it keeps about 25,000 people off welfare.

But in an interview with the Detroit Free Press, multi-millionaire Rick Snyder says that money doesn't matter to the working poor.

"It is really a federal program. You get $1 from the federal program and you got 20 cents more from the state. You stop and ask from a policy perspective, was anyone joining the EITC program to get those extra 20 cents? No. They were making the decision to get the dollar."

That extra 20 cents doesn't help people, doesn't motivate people? Maybe to help multi-millionaire Rick understand how the little people think, we should put it into business terms. Let's say some company, maybe one selling computers, say a 20 percent decline in sales of one of its products, like computer keyboards, would
the company CEO react? Wouldn't he or she want to know why? Or what if someone came to this CEO and said, I know how to increase our revenue on this particular piece of our business by 20 percent, wouldn't the smart CEO want to know how that could be done? Especially if the market was really, really tight and extra sales were hard to come by and the company needed every dime it could scrounge up?

But when it comes to working poor people, Snyder wants us to believe they don't need that extra 20 percent on one piece of their income. Why, they won't even notice it. Balderdash.

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