Targeted Incentives Have Gone Too Far

Selecting industries is not the way

Select tax incentive deals are in the news, again.

A new report from the left-leaning national group, "Good Jobs First," lists 240 "megadeals" nationwide over the past few decades and found that Michigan leads the pack with 29; six more than second-place New York.

MLive reporter Melissa Anders noted that this adds up to $7.1 billion worth of incentives and does not include sports stadiums.

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Bridge magazine writer Rick Haglund has written a series of recent articles on the state's recent experience with these deals.

Haglund quoted my Mackinac Center colleague Michael LaFaive as well as Gilda Jacobs, president of the Michigan League for Public Policy and former state senator, and Mitch Bean, the retired director of the state House Fiscal Agency. They all mostly pan the expenditures.

"We would be better off if we had a tax policy that reduced the rates and eliminated as many tax expenditures as possible," Bean said.

Select tax incentives and business subsidies are not just bad economics, they are wrong because they encourage government to tilt the playing field toward and against different industries.

There also is a political lesson that Republicans and Democrats should learn: Established politicians have a bias when government tries to target specific industries. That's one of the reasons why the current GOP-majority isn't making much noise about the Michigan Economic Development Corp. right now, whereas Democrats want to eliminate some of the programs now that they are in the minority.

In truth, the game of picking economic winners and losers is bipartisan. It favors some business against the rest, and citizens are the real losers.

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