Should a tax incentive program meant to attract large businesses to the state be renewed?
Michigan created the “Good Jobs for Michigan Program” in 2017, a tax incentive program meant to attract large businesses to the state or reward an existing business for expanding and creating additional jobs. The program currently has a cap of $200 million in total incentives. There are numerous requirements a business must meet to be eligible for the program, including creating a minimum of 500 new jobs with wages equal to or greater than the average wages for the area. A qualifying business benefits by capturing state income taxes withheld from the new employees in the new jobs created. Since the program began, most of the $200 million cap has been used up as incentives to Fiat-Chrysler in return for commitments to expand investment in the state and create new jobs. The program included a “sunset” date of December 31, 2019 which means that it will end this year unless it is extended by the legislature.
Opponents of extending the program claim that giving away taxpayer money to selected businesses comes at the expense of all other businesses that must pay higher taxes if they are not lucky enough to be chosen for the program. They say that only big businesses can meet the qualifications, and the process invites political corruption as lawmakers and economic development bureaucrats are wooed by big companies looking for a handout for expansion they would have undertaken anyway. Opponents of extending the program point to the history of similar failed programs, such as MEGA (Michigan Economic Growth Authority) grants from the Granholm years that are still costing billions of dollars and reducing tax revenue until 2030 while the promised new jobs rarely materialized. Opponents also believe that when tax revenue is decreased by these big corporate give-away programs, lawmakers will hike taxes on small business and citizens to make up the difference.
Supporters of extending the program argue that it is an effective, targeted method in helping spur major investments that create large numbers of jobs. They claim that these incentives are necessary for Michigan to compete with other states that offer similar programs to lure away Michigan jobs and keep new jobs from coming to our state. Supporters say that the qualifications for receiving the incentives are designed to be sure that the new jobs must materialize before any incentives are paid out. Supporters of extending the program claim that this is an important tool to diversify Michigan’s economy and assure that high wage jobs stay in the state. They believe that targeting major companies for tax incentives is more effective at attracting good jobs to the state than broad general policies such as tax cuts for all businesses or citizens. Supporters say that the incentives to Fiat-Chrysler under the program are expected to create about 6,400 new jobs and that the program must be extended to attract more large-scale investments in the state.
Should the “Good Jobs for Michigan” Program be Continued?