LANSING, Mich. (AP) - Michigan could again offer lucrative tax breaks to companies that add hundreds of jobs in the state under legislation overwhelmingly approved Wednesday in the Senate, a reversal of the shift away from such incentives under Gov. Rick Snyder’s watch.
The bills are backed by a coalition of business executives, economic development officials and building unions that says Michigan is losing business to nearby states such as Ohio and Indiana and Southern states such as South Carolina and Kentucky. Snyder, a Republican, also supports the concept of the legislation as a way to attract good-paying jobs.
The measures would authorize Michigan to let qualified companies adding jobs keep half or all of the income tax withholdings of the new employees for five or 10 years. The businesses would have to create at least 500 jobs that pay the regional average wage or, if they pay at least a quarter more than the regional average, at least 250 jobs.
Retail stores, pro sports stadiums and casinos could not qualify for the tax breaks, and annual foregone revenue would be capped at $250 million. No more than 15 new projects could be approved each year.
Michigan stopped issuing new business tax credits beginning in 2012 as part of Snyder’s overhaul that slashed business taxes overall, instead favoring cash grants and loans for economic development. But the state remains liable for credits worth billions of dollars that were given to automakers and other major employers, especially to keep jobs in the state during the Great Recession.
The bills’ advocates say unlike the old Michigan Economic Growth Authority program, the new Good Jobs for Michigan initiative would apply only for new jobs. They contend that the measures are especially relevant now that President Donald Trump is focused on bringing jobs back to the U.S. and the competition among states intensifies.
“This is definitely not a MEGA,” said the main bill sponsor, Republican Sen. Jim Stamas of Midland. “This has a cap. It has accountability in it. … If you don’t provide the jobs, you don’t get the incentive.”
The legislation was approved on 32-5 and 33-4 votes with broad bipartisan support, with some Republicans in the GOP-led Senate opposed. Its fate is less certain in the House, where similar bills died late last year. Majority House Republicans last month failed to pass an income tax cut and may resist the measures partly because of how it would look to enact business incentives but no tax cut for individual taxpayers.
“We need to start pursuing broad-based tax incentives that benefit everybody, not these targeted incentives that benefit 15 some odd companies,” said Sen. Patrick Colbeck, a Canton Republican who voted against the main bills. “I’m tired of the businesses being prioritized over the best interest of everybody. … There seems to be a push so that all the folks that are putting money into campaigns are the ones getting the priority and not the people that put us in office in the first place.”
The legislation is the second major economic development initiative to clear the Senate this year. Bills pending in the House would let developers keep some of the income, sales and use taxes generated from pursuing “transformational” projects on contaminated and blighted sites.
Snyder, who has criticized targeted business tax incentives, said last week he generally supports the concept of both packages.
“Fundamentally, they’re both addressing areas that need to be addressed,” he said. “There’s a need for a tool in the toolbox for potentially large manufacturers or other employment opportunities, particularly where they have above-average wages.”
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Online:
Senate Bills 242-44: https://bit.ly/2mNMYtN
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Follow David Eggert on Twitter at https://twitter.com/DavidEggert00 . His work can be found at https://bigstory.ap.org/author/david-eggert
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