Michigan lawmakers routinely fund and create new economic development programs. They take different forms, but they all are aimed at using public resources to aid a private interest, whether that be automobile manufacturers, filmmakers, real estate developers, technology start-ups, the tourism industry or battery manufacturers. But more than likely, all of these programs, handouts and special tax treatment would have been deemed unconstitutional for about the first hundred years of Michigan’s history as a state.
Although the state’s constitution did not change in a significant way, corporate handouts began to be permitted following a 1941 case concerning the apple industry. A close look at the case reveals that the arguments used to overturn Michigan’s long-standing precedent against corporate handouts were exceptionally weak. Justices simply argued that apples were big business, and as such, worthy of subsidy. It may be time for the courts to revisit this decision and the larger question of the constitutionality of using taxpayer resources to subsidize private interests.