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This Explains a Lot About Michigan

The state of Michigan is a hoot.  The politicians craft laws that create one of the worst business environments in the nation, and then scratch their head and wonder why all the jobs seem to be leaving.  One explanation may be that they simply don't understand even the fundamentals of business.

Case in point:  I have to pay a yearly registration fee as a corporation in Michigan.  That fee is based on the number of shares of stock my company has outstanding.  If my company were worth a million dollars, and had issued one share worth a million dollars, we would pay lower fees than if the same company had issued a million shares each worth one dollar.  Basing taxes and business fees on economically meaningless numbers is probably a leading indicator of some deeper issues.

Posted on February 14, 2008 at 01:51 PM | Permalink


I guess the principle is:


*A tax is a punishment, a fine, a disincentive

Posted by: Bearster | Feb 14, 2008 4:19:16 PM

I have lived in Michigan for the past 20 years, and watched the downhill slide. Starting with the mill stone of Detroit around the neck of the state, there are so many fundamental problems with the state's culture and economics that I have become pessimistic about the possiblity of any substantial recovery.

Our state's democratic govenor is the captive of a varied set of "taker" special interest groups. Real change, in taxes or regulations, is impossible for her to even attempt. You are right, the state is quite anti-business, with many burdens placed on any employer.

Well, my wife and I are still working, and contemplating where we can move. One last thought for MI, it's time for Detroit mayor Kwame Kilpatrick to run for govenor!

Posted by: Douglas Joslin | Feb 15, 2008 8:17:10 AM

That's common in most states actually.

Posted by: ParatrooperJJ | Feb 15, 2008 8:29:15 AM

But Jeff Daniels tells me on TV every day that Michigan is the country's best state for business. Something about inexpensive labor, I think.

Posted by: Kyle Bennett | Feb 15, 2008 10:28:34 AM

The real question is: what are the best alternatives? With the nonsense going on constantly in washington I want to move to another country, does anyone have any ideas? Some of those former soviet bloc ones have high growth but there's always a chance russia will take 'em over again given the way things are going.

Posted by: MC-YT | Feb 15, 2008 10:39:38 AM

Another question I have is: Who thinks things will gradually get better vs. spiral downward until theres a revolution? I'd like to think things won't mirror the events of Atlas Shrugged but looking back through history it seems that humans resemble the "frog in a pot" when it comes to being ruled. Will we eventually turn into a 3rd world country or can things change direction?

Posted by: MC-YT | Feb 15, 2008 10:45:24 AM


Ireland and Estonia are doing pretty well tax-wise, but then you've got the nonsense from Brussels to worry about. Hong Kong is still nice, but there's the obvious future uncertainty there. Have you looked into Bluefields, Nicaragua? Even the Nicaraguan government recognizes it as an autonomous zone, it's nearly anarcho-capitalist, very low violence, lots of beer, and the economy is booming thanks to unintended consequences of the DEA nonsense coming out of Washington.


Posted by: Kyle Bennett | Feb 15, 2008 10:48:40 AM

If what you say is true, why do stock splits exist? And since stock splits do exist, and everyone but Berkshire Hathaway uses them to keep their share price under $200 (no matter how many shares outstanding that gives them), is Michigan's policy really a bad idea?

Posted by: Noumenon | Feb 19, 2008 8:09:45 AM

Most public companies are registered in Delaware.

Posted by: ParatrooperJJ | Feb 19, 2008 12:22:08 PM

I just learned that Delaware's corporate franchise tax uses the "authorized shares method."

Posted by: SRC | Feb 27, 2008 9:22:42 AM

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