MEGA Stories

In Wednesday's  MIRS "Capitol Capsule" (subscription required), Michigan Economic Development Corp. CEO Greg Main discusses the latest Michigan Economic Growth Authority targeted tax break deals for selective "winner" companies. MEGA is the flagship program of the state's "economic development" bureaucratic empire over which the MEDC presides.

Main said: "For those of who have been critical of the MEGA program, I would invite them to take a look at the results. I am excited about what this bodes for the future."

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OK, we'll look.

Actually, we already did. Twice. In depth and detail. In 2005 and 2009, the Mackinac Center published major empirical analyses of MEGA. Using two different rigorous statistical techniques in two different time periods both studies found that — at best — MEGA creates no new jobs, and on balance it may even destroy them on a net basis. Further, only 29 percent of the direct jobs promised by MEGA deals inked between 1995 and 2004 actually happened.

To date, the MEDC has not refuted a single point of fact in either study, or produced any systematic, independent evidence demonstrating that its approach does squat on a net basis to create jobs, increase state incomes or expand our economy.

Yet not only is MEGA still going strong, legislators keep expanding it.

Taxpayers — including the majority of business owners who pay for but never get a dime of all the discriminatory tax breaks and subsidies — should demand that not another penny goes into MEDC's programs or bureaucracy until the evidence of MEGA's failure is refuted.

Which means never.

Parting shot: At least one news outlet has reported that "Wonderstruck Studios, LLC" has dropped plans to build a promised film studio in Detroit, for which it had been given a MEGA deal.

Even if this deal were costless to taxpayers, it still underscores the inability of the state to accurately pick winners from losers in the marketplace. The real cost of these programs is that their endless streams of press releases giving cover to legislators unwilling to finally undertake the politically heavy lifting of adopting a real economic development program: reforming Michigan's tax, spending, regulatory and labor environments.