Detroit meets the Laffer Curve

Much of the public discussion – and most of the questions at Rick Snyder’s Thursday news conference – about the governor’s pending decision on appointing a Detroit emergency manager have concentrated on the political optics of the state intervening in its biggest city’s affairs.

The political-media class loves politics, but struggles with numbers.

But it is numbers that have brought Detroit to this point. Urgent numbers that require solutions. Bankruptcy concentrates the mind, and so reporter Joel Kurth’s superb “5 ways to start a recovery” – the result of interviews with economists about declining Detroit property tax revenue – in Friday’s Detroit News is worth reading.

Their first solution? Lower taxes.

“Detroit has the highest tax rate among the nation’s big cities and collects taxes only from about half of its property owners. More property owners might be inclined to pay if taxes were lower and assessments were realistic,” find Kurth.

Economics 101. Arthur Laffer couldn’t have put it better – yet Democrats have consistently argued that what ails Detroit and Michigan are not enough taxes. The Detroit News’ fine reporting on how excessive taxation DETERS tax collection should be Exhibit A in today’s political discussion – and not just in Southeast Michigan.

On Planet Washington, the Obama Administration is still convinced that higher taxes are the way out of the nation’s fiscal crisis – a crisis driven by long-term liabilities that would make Detroit blush. Yet our president and his media chorus are careening towards a sequester pileup convinced that punishing Americans with more tax hikes will haul us out of national bankruptcy – and a failing recovery.

Haven’t they seen Detroit?