News reports that the firm Evergreen Solar will file for bankruptcy and close
its operation in Midland, Mich. The maker of solar cells cites over-capacity in
the industry, competition from China and fewer government subsidies as
contributing factors. According to Bloomberg, the firm has 133 employees
Given a Michigan location and participation in a
politically faddish industry, readers won’t be surprised that Evergreen was the
beneficiary of special state subsidies and a local tax break. Specifically,
three years ago Evergreen Solar was
offered a $1.8 million “refundable” tax credit by the Michigan Economic
Growth Authority. For firms with little or no tax liability, this amounts to an
outright cash subsidy, contingent on attaining certain employment and
investment milestones. Evergreen Solar’s specific tax liability is not
The deal was based on crystal-ball projections from the
Michigan Economic Development Corporation using a software program known as REMI,
that an Evergreen deal would create exactly 596 direct and “spin-off” jobs by
2018, producing $18.5 million in new state tax revenue.
The city of Midland also granted property tax abatements
worth $3.9 million over 12 years, according to Mlive.com.
It’s not known how much, if any, of these subsidies and tax breaks were ever
collected by the company.
This is not the first time the MEDC and its job forecasters have been wrong, and its not likely to be the
last: History and empirical evidence (including two Mackinac Center analyses of
MEGA, published in 1995 and 2009) repeatedly demonstrate that transferring
capital-allocation decisions from investors in market systems to central planners in
political ones is a recipe for wealth-destruction rather than job creation.
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