MEGA would require companies to spend thousands of dollars in the application process with no guarantee that they will be selected for an incentive. In addition, MEGA would actually require a company to evaluate the advantages of locating in competing states.
The process of applying for a MEGA credit would be expensive. Without knowing whether or not it will receive a credit, the company must
1) solicit the participation of local units of government and receive a commitment of financial or economic participation;
2) delay construction and public announcement of the facility location;
3) calculate average wages for the county of location and make sure the proposed wages exceed them;
4) certify that the tax credit is the deciding factor in its location decision;
5) commit to retain all other employees, whether or not they are performing needed functions;
6) provide proof that it has a sound financial record;
7) convince the MEGA board that the credit is needed due to a significant cost disparity between Michigan and a competing state;
8) convince the MEGA board that the relocation will "benefit the people of this state";
9) have its lawyers draft and/or review the written agreement; and
10) provide proof of its continuing compliance.
It should be clear that this process would be extremely time consuming, and a complete waste if the credit is not approved. A general tax rate reduction, on the other hand, requires no time or expense on the part of the businesses.
A perverse result of the MEGA proposal is that companies seeking the tax credit will be required to evaluate locating in, and perhaps even solicit bids from, competing states. Encouraging Michigan businesses to explore expansion opportunities in other states weakens the state's ability to retain jobs. What these businesses seek, they may very well find .