The Hangar42 film studio scandal
in Grand Rapids
continues to grow. This week a second
person was charged with felony fraud for allegedly inflating the sale price
of a piece of property in order to get more tax credits from the state. Some
film incentive supporters may argue that since the scam was caught early enough
(thanks to the Mackinac Center), no tax credits were granted and therefore Michigan taxpayers lost
no money in the deal.
Nevertheless, information obtained by a state Attorney
General investigator should be alarming to all taxpayers. The investigator’s affidavit
states that the accused tried to sell the $10 million in assignable
Michigan tax credits “to a company in Rhode Island for an instant cash payment” of
If not for the questions initially
raised by the Mackinac Center, this scheme
could have very well cost Michigan
taxpayers, and worse, done so without their knowledge. This case is just one
example of what can happen when government is allowed to be selective — and
secretive — about their handouts.
Late last year, two bills (SB 796 and SB 889) calling
for more transparency in the film subsidy program were signed into law.
And according to a
recent article in MIRS (subscription required), Gov. Rick Snyder
proposes an end to a laundry list of tax credit cuts, including those for the film
“Gov. Rick Snyder's
administration gave business groups today a peek of its vision of a
stripped-down six-percent corporate income tax that eliminates the MEGA,
brownfield, film and every other state business tax credit outside of one small
business tax credit.”
While the Mackinac
Center has thoroughly documented their ineffectiveness,
tax credit programs like the film incentives likely attract plenty of honest
folks with genuine intentions of creating jobs. However, as the current law
stands, these programs can also pave the way for temptation to hatch schemes
For these reasons alone, there should be no hang-ups about
doing away with these government goody programs.
Mackinac Center Investigation Leads to Criminal Charge
Attorney General Heeds Requests for Investigation of Embattled Film Studio
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