Questions surrounding the "Hangar 42" movie studio subsidy-seekers are so troubling that the Mackinac Center has called for an investigation by the Michigan Legislature, Michigan Attorney General or the U.S. Attorney's office. The involvement of a state legislator on behalf of the subsidy seekers adds another layer of questions.
But what should trouble both taxpayers and journalists more than anything is the iron curtain of government secrecy surrounding this deal and the entire film subsidy program. Bureaucrats in the Michigan Film Office, the Michigan Economic Development Corp., the Department of Treasury, the Attorney General's office and Office of the Governor have all hidden behind what amounts to a Big Lie.
The lie is that they can't talk specifics because that would require revealing "tax information."
Baloney. The facility is in a "renaissance zone" according to the owner and The Grand Rapids Press, and so is virtually exempt from all state taxes. The subsidy seeker has no tax liability.
This entire deal is about getting a marketable asset from the state —an "assignable" Michigan Business Tax credit that can be sold — with the cost ultimately picked up by taxpayers. Lawyer me no lawyers, it's a subsidy, darn it!
Not every recipient of a state film or other business subsidies is in a renaissance zone, but state officials shouldn't be allowed to hide their check-writing activities from the public on those deals, either. In most cases "refundable tax credits" is the legal device they use to do so. "Refundable" means the state writes a check for however much of the credit is left over after the recipient covers any Michigan Business Tax liability.
But everyone knows that many recipients of these "credits" have little or no business tax liability, so most or all of the "credit" will be in the form of check drawn on the account of John and Mary Taxpayer.
There's a term for those checks: Corporate Welfare. Not "credits" or "incentives," but handouts and cash subsidies.
As long as the media and everyone else continues using the phony "credit" language the bureaucrats get away with the Big Lie and the politicians won't be held accountable.
It should end. Selective, discriminatory tax breaks for some but not all are bad enough, but when the state starts writing welfare checks any expectation of confidentiality should go out the window. Specifically, on every one of these special deals the exact amount of the welfare check should be revealed to the public. If the recipient doesn't want the information revealed, then fine, they don't have to apply for the subsidy.
Ms. Granholm, tear down this wall of government secrecy!
Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.