The state’s largest teachers union, the MEA, is raising the stakes in the state tax debate today with a new study on business tax breaks. A few highlights from the study by Anderson Economic Group:
Michigan has some three dozen state-level tax incentive programs designed to attract or retain various types of economic activity.
There is no clear inventory of those incentive programs and no long-term measurement of their effectivenss.
Because of lax self reporting and even more lax auditing of incentive results, “both the recipient company and the state government often have an incentive to allow inflated reports of job creation to stand unchallenged.” The government claims of billions of dollars in business investment and hundreds of thousands of jobs retained or created through the tax breaks. But those self-reported claims are not independently tested or verified. In other words, know one really knows if, or how well, tax incentives are working.
As one example of the short-sightedness of tax incentives, the much-ballyhooed film credit is estimated to cost in excess of $50,000 per new job per year in lost tax revenue. “The state is not just incentivizing activity, it is actually paying for the activity.”
Over the past two decades, more than $76 billion in industrial property value has been abated from taxes. Three counties — Schoolcraft, Allegan and Saginaw — have abated more than 30 percent of their taxable values to award incentives to specific kinds of economic development.
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Sure, “cost in excess of $50,000 per new job per year in lost tax revenue,” but we’ll make it up in volume!
Since I can’t find a link to the Michigan Senate Fiscal Agency, “Presentation on Michigan Film Credits,” 23 October, 2008. as presented in the MEA’s report, I’m not sure if this is discussed, but it seems like this report, as pertains to the Film Tax Credit wholly leaves out increases in personal income tax and SBT due to these vendors purchasing food, lodging, sundries, and other items from local vendors.
It is time to eliminate the MBT and put all business in Michigan on the level playing field. To offset some of the lost revenue the income tax and sales tax should be increased. It is time to start taxing professional sporting events.If folks can pay $150 for one playoff ticket they certainly can pay 6% more.
Perhaps instead of eliminating the MBT, the state offer a direct and equative deduction in MBT for the salary of new hires within that company, providing businesses who are doing well the capability to hire new staff to grow their business, eliminate some of the joblessness, and retain the talent we have in the state (and perhaps draw in new talent). Let those companies who want to expand do so, and give them incentives to do it all the while.
Thus, the state retains the revenue it desperately needs, to some degree, sees increases in income and sales tax from the new hires and their expenditure of the wages they earn within their locality and within the state. Not to mention, the savings in unemployment by drawing currently unemployed people off those roles.
Agreed on sales tax on luxury items like professional sporting tickets.