Michigan is Leader in Corporate Tax Give-Aways

number oneIn the course of researching a recent article on education funding, Democracy Tree ran across some little known and truly astonishing data about Michigan tax breaks to corporations.

While we can now clearly draw a bright line between corporate tax give-aways and cuts in education spending, and we also know that Gov. Snyder shamelessly plundered the K-12 budget to pay for his across the board tax incentives to his imaginary friends, the “job creators”, what we are just now learning is that many of these corporations have been playing our state legislature as the fool for decades.

Michigan is the national leader of the pack in giving-away free money to companies that have done little to create a single job in the state, and where they are created, they cost enormous sums in off-setting tax bonuses. The non-profit, Good Jobs First, has conducted an exhaustive state-by-state analysis of corporate tax incentives over a three decade expanse, and the Great Lakes state appears to be the most easily duped by these corporate come-ons. A fact not surprising, given the state also took the lead in losing its manufacturing base under Reagan-era economics.

In their report, Megadeals: The Largest Economic Development Subsidy Packages Ever Awarded by State and Local Governments in the United States, Good Jobs First found that Michigan had made fully 29 outrageously over-the-top corporate tax give-aways — making the state the national leader, with New York coming in second at 23. Michigan forfeited a whopping $7,101,236,000 (yes, billion) to mostly large fortune 500 type companies in return for little if anything at all. Much like Snyder’s tax breaks, these bonuses were untethered to any real and measurable job growth — they were nothing more than a trickle-down wish and a prayer.

The salient point here is that, this corporate tax break strategy has not worked for Michigan job-creation for fully thirty-plus years, and thus Snyder’s ramped-up policy is not based on solid economics of any kind.

The report put some of the national data in perspective with the following observations:

  •  Of all fifty states, Michigan accounted for fully 12 percent of all the “megadeals” with corporations for favorable tax environments.
  • Nationally, since 2008 the number of megadeals has roughly doubled. While the tax game has been mostly bipartisan, it is interesting to note that as states have been increasingly become politically red, and Tea Party influence has grown, so has this give-away trend.
  • The average cost per job “created” under this tax scheme is an obscene $456,000 a piece. Not a bargain, but instead the result of something termed “trophy deals” where in states compete against each other for a manufacturing facility.
  • One in ten deals involve relocating within the same state, sometimes in the same municipality, often struck as a “retention” deal. Threats are frequently made to abandon previously agreed deals in a bid to blackmail for even more money.
  • Among the corporate goons perpetrating this on states are sixteen of the Fortune 50 companies. Among the most active tax dodgers are: Wal-Mart, all of the “Big Three” automakers, Exxon Mobile, Royal Dutch Shell, Boeing, Airbus, Citigroup, Goldman Sachs, Walt Disney, ESPN, Sears, Cabelas, General Electric, Dow Chemical, Amazon, Apple, Intel, and Samsung.
  • Fifty-six of these megadeals went to companies located outside the United States. 

Michigan has been the leader in every economic trend since the dawn of the automobile, including those moving downward. These fruitless corporate tax incentives should serve as a warning to the rest of the nation as something not to do.

Amy Kerr Hardin

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