For the first decade of the 21st century, the Michigan Legislature’s policy direction was to try to centrally plan Michigan to economic prosperity.
The Legislature took more from individuals and small businesses through higher income and business taxes, and increased excise taxes on goods such as tobacco. The state’s corporate welfare arm, the Michigan Economic Development Corporation, was expanded, transferring ever-larger sums from taxpayers to politically connected firms through tax breaks and subsidies. By nearly all measures, these programs have been a colossal failure.
But now Michigan is back from the brink. In the second decade of the 21st Century, legislators cut business taxes and scaled back some corporate welfare. Lansing eliminated project labor agreements and eliminated prevailing wage, both of which decreased the cost of government construction. Lawmakers also shored up public pensions and right-sized other government employee benefits, reducing the size and cost of government. And Michigan became the 24th right-to-work state.
While the state has improved, there’s more to do. There is general agreement among economists and public policy groups with activists on both sides of the political spectrum that lawmakers should get out of the business of subsidizing some businesses and industries at the expense of others. Michigan should eliminate all of its corporate welfare programs and get out of the business of trying to pick winners and losers.
Instead, policymakers should take a “fair field and no favors” approach to economic development, reducing taxes for everyone across the board — starting with the state income tax. This will help unleash the full potential of Michigan entrepreneurs and innovators, and they will fuel continued economic growth for the Great Lakes State.