Tax incentives under question

LANSING, Mich. – Michigan has no way to know if the millions of dollars it hands out in tax incentives and tax abatements are effective because it doesn’t systematically measure the results, according to a new study by the Anderson Economic Group, the Lansing State Journal reported. However, the company’s own review found mixed results.

In a study commissioned by the Michigan Education Association, the firm said that it analyzed eight incentive programs totaling $900 million in tax breaks in 2008 and found that the high-profile movie industry program was the least effective, the Journal reported.

The film industry incentive effectively pays at least $50,000 for every job created, according to Patrick Anderson, company CEO. 

Michael Shore, a spokesman for the Michigan Economic Development Corp., told the Journal that it’s too early to evaluate the program, just entering its second year. He said other incentive programs have taken time to show results.

The Anderson study found that PA 198 abatements, generally given to manufacturers for rehabilitating industrial properties or building new ones, were effective because they target an industry in which Michigan has a competitive advantage, Anderson told the Journal.

MEA President Iris Salters told the Journal that the teachers union is interested in how the state spends its money because those dollars could go to public schools.

SOURCE:
The Lansing State Journal, “Study: Mich. business tax breaks may fall short,” May 14, 2009

FURTHER STUDY:
Mackinac Center for Public Policy, “The Michigan Film Incentive: EMS and Child Day Care vs. Movies,” April 14, 2009