Gov. Snyder’s Proposed Corporate Income Tax, Including Elimination of MEGA Program and Film Subsidies, Holds Promise for Michigan Economy, Analyst Says
‘Jobs’ programs not only failed, but distracted policymakers from effective tax reform
For Immediate Release
Friday, Jan. 28, 2011
Contact: Michael D. LaFaive
Director of Fiscal Policy
Michael D. Jahr
Senior Director of Communications
MIDLAND — Today’s announcement that Gov. Rick Snyder’s flat corporate income tax proposal would eliminate Michigan Economic Growth Authority tax credits, including the film subsidy, represents a victory for taxpayers and good government, said Mackinac Center Director of Fiscal Policy Michael LaFaive.
“This is a bold move to fix Michigan with a simpler business tax system and one that would eliminate ‘jobs’ programs that don’t create any,” said LaFaive.
The Mackinac Center has been the longest and most consistent critic of MEGA and other economic development programs. In 1995, Center analysts published a study that warned against undertaking the MEGA program. A 2005 Mackinac Center study found that for every $123,000 in MEGA tax credits offered, the program created just one construction job, but 100 percent of those disappeared within two years. The Center’s 2009 MEGA study found an association between manufacturing jobs and the program, but it was negative. That is, for every $1 million in tax credits actually earned by MEGA companies in a given county, there was an associated loss of 95 manufacturing jobs in that county.
“At best, MEGA is a job announcement program, not a job creation program,” LaFaive added.
Mackinac Center President Joseph G. Lehman said the decision was a positive development for Michigan’s struggling economy. “MEGA has been one of Michigan’s brightest industrial policy failures, distracting lawmakers from effective tax reform while dozens of states left us in the dust,” Lehman said. “More moves like this will stop Michigan’s slide and begin her resurgence.
“Who knows how many of our 858,000 lost jobs could have been saved if Gov. Snyder’s predecessors had done what he is doing now?” Lehman added.