MIDLAND – Lansing lawmakers are proposing that Michigan’s quasi-public Michigan Economic Development Corporation (MEDC) be defunded by $35.5 million as a way to maintain the state’s merit scholarship program at the current level of $2,500, which Gov. Jennifer Granholm has targeted for a scale-back to only $500. A Mackinac Center for Public Policy analyst today said eliminating the MEDC – as a dispenser of selective corporate tax subsidies – is a good idea regardless of the budget advantages that might result; one that would make it easier for all Michigan businesses to create jobs.

The proposal, introduced by Rep. Jack Brandenburg, R-Harrison Twp., of the powerful House Appropriations Committee, is gaining support in Lansing. A spokesperson for the governor indicated Ms. Granholm would consider the proposal.

Michael LaFaive, the Mackinac Center’s director of fiscal policy, said, “The MEDC hands out selective favors to a lucky few firms. Instead of discriminating in favor of a few businesses at the expense of others, the state should enact policies that help all businesses, improve the labor climate, and curtail state spending so we can bring our tax burden below the national average.”

But eliminating the MEDC would not be a silver bullet for all that ails Michigan’s economy, LaFaive said, adding that the state should also:

  • Continue to cut taxes. Michigan businesses and people pay more taxes, on average, than those in 34 states. The state should continue to cut business costs by cutting taxes.

  • Enact labor reform. Research by the Mackinac Center and others indicates that state economies grow faster in right-to-work states than they do in states without right-to-work laws.

  • Repeal the prevailing-wage law. Michigan spends about $400 million more than necessary each year on government-funded construction projects because of this law.

  • Reform regulations. The state should examine carefully the cost of regulations on job providers and roll back the most costly and unjustified ones.

The Mackinac Center for Public Policy is an independent, nonpartisan research and educational institute based in Midland. Its recent report recommending more than $2 billion in spending reductions and revenue enhancements is available at http://www.mackinac.org/5046.

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