Tax incentives necessary to compete for jobs
Although a lot of people have problems with the concept, the State House of Representatives on Wednesday put Michigan squarely in the middle of the tax incentive game, when it comes to attracting new jobs to the state.
The House approved a package of bills, 71-35, in a bipartisan vote, setting up what’s known as the “Good Jobs” program. The Senate approved the measures in March. Gov. Rick Snyder is expected to sign the bills into law.
The program, which will be capped at $200 million in incentives per year, will reward companies who create new jobs within Michigan’s borders. How much the companies would get would be determined on how many jobs they create and the level of pay for the jobs. The bills include a 2019 reauthorization date.
For example, The Associated Press, in stories Wednesday, reported that businesses can qualify for incentives in one of three ways:
— Creating 3,000 or more jobs that pay at least the average regional wage. They can keep all of the employees’ income tax withholdings for 10 years.
— Creating at least 500 jobs that pay the average regional wage or more. They can keep half of the income taxes for five years.
— Creating 250 or more jobs that pay at least a quarter more than the average regional wage. They can keep all of the income taxes for 10 years.
Snyder campaigned for passage of the bills, in part, to attract Japanese electronics giant Foxconn, which plans to construct a new plant somewhere in the U.S., employing as many as 5,000 workers.
A Foxconn official mentioned Michigan, Wisconsin, Ohio, Illinois, Indiana, Pennsylvania and Texas, as among the states where the facility may be sited.
This kind of program doesn’t sit well with some people, who claim such efforts are little more than a tax giveaway. In addition, they argue Michigan has tried tax incentives and similar programs in the past with mixed results.
That said, Republican Rep. Jason Sheppard, of Temperance, had a point when he ruefully observed that in a “perfect world,” states would let companies base their decisions on other factors besides tax breaks.
“However, we live in a reality world today where we are essentially in an arms race, not only with our bordering states but the entire country and world,” he told AP. “If we cannot equip our state organizations with consistent and meaningful tools to attract new industry here, to create jobs, we will always be at a disadvantage.”
The Foxconn possibilities aside, this is a program that Lansing decision makers absolutely must monitor, to insure it is administered fair, equitably and transparently. If it isn’t working, it should be terminated.