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MICHIGAN'S HIGHEST TAXED CITIES EXPERIENCED 10-YEAR ECONOMIC DECLINE; LOWEST TAXED CITIES EXPERIENCED HIGHEST ECONOMIC GROWTH

 /ADVANCE/MIDLAND, Mich., Dec. 14 /PRNewswire/ -- Michigan cities with the highest taxes and highest levels of government spending experienced the worst economic performance during the 1980s, according to a new study released today by a Midland-based think tank.
 The Mackinac Center for Public Policy, a non-profit research and education organization, studied the effects of tax rates on 11 of Michigan's largest cities, all with populations above 75,000. It found that the cities with the lowest per capita tax rates and lowest spending levels experienced the highest levels of economic growth.
 "These findings clearly suggest that the road to economic prosperity begins with holding the line on, and even reducing, taxes," said Dean Stansel, co-author of the report and adjunct scholar for the Mackinac Center.
 "It may seem difficult, and require tough choices, but some cities are finding a way to do it," he said.
 The report used an Economic Performance Index (EPI) to determine if cities grew or declined over the last decade. The index registered such factors as the poverty rate, change in population, job growth, and per capita income.
 Six of the 11 cities -- Ann Arbor, Grand Rapids, Livonia, Sterling Heights, Warren, and Westland -- showed positive EPI scores and were considered "growth cities." Five of the 11 -- Dearborn, Detroit, Flint, Kalamazoo, and Lansing -- turned in negative EPI scores and were considered "declining cities."
 "We found that total per capita taxes were 64 percent higher in the declining cities than in the growth cities. This difference would amount to an additional $1,100 in taxes per year for the average family of four," said Stansel.
 "We need to start realizing that people are not fools. If they shop at Walmart to save pennies, then they will certainly move their homes and businesses elsewhere if they can save thousands of dollars in taxes," Stansel said.
 "The answer is for city officials to look at ideas such as privatization, reduced bureaucracy, and more careful spending habits, in order to lower taxes," said Stansel.
 Of the 11 cities examined in the study, Detroit was found to have declined the most during the 10-year period.
 -0- 12/15/93
 /CONTACT: Lawrence Reed of Mackinac Center for Public Policy, 517-631-0900/


CO: Mackinac Center for Public Policy ST: Michigan IN: SU: ECO

KE -- DE013 -- 3259 12/13/93 15:03 EST
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Publication:PR Newswire
Date:Dec 13, 1993
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