Lansing Politicians Betray Their Stated Ideals

Watch what they do, not what they say

It’s well known that talk comes cheap to politicians the world over. In Lansing, even legislators’ written and published ideals are tossed aside for Michigan’s richest men — billionaire Dan Gilbert as one example — or some multinational corporation — like Foxconn of Taiwan as another. Lansing politicians still make sure the superrich get to play by different rules than everyone else.

This spring and summer, lawmakers in Lansing passed two pieces of corporate handout legislation. The proposals were euphemistically known as “MI-Thrive” (or “Gilbert” legislation after its biggest champion and purported beneficiary) and “Good Jobs for Michigan.” This latter program is modeled in part after the old, failed Michigan Economic Growth Authority program. We call it “New MEGA” for its similarities.

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Both laws permit large developers or corporations to keep tax dollars that would otherwise flow to the state for public services. These “capture” programs are explicit subsidies to big business — acts of corporate favoritism — and ones chosen by appointees of Lansing’s political class.

In early 2017, and with great fanfare, Republicans in the state Legislature announced their 2017-2018 action plan titled, “The Best Way Forward: Common-Sense Leadership for the People of Michigan.” In it, they wrote:

To provide people with more opportunities, we will support a broad-based economic environment that is friendly to job creation and business growth, no matter the size of the business. We are also going to protect the taxpayers’ investment by making sure the funds used by the Michigan Economic Development Corporation are transparent to the public, directed toward long-term viability, help small businesses and are not wasted on picking winners and losers. [Emphasis added.]

Despite the pledge not to favor large businesses, the majority of Republicans voted to pass the first of two pieces of legislation in May, which was very clearly designed to subsidize big businesses. The Gilbert legislation gives out subsidies for projects with a minimum investment of $500 million in cities with a population over 600,000 (in other words, Detroit). The legislation also permits subsidies for smaller, but still heady, investments.

Despite the pledge not to pick winners and losers, another bad idea, the New MEGA legislation, was adopted in July. It was sold in part as a tool to win new manufacturing plants, specifically from the multinational corporation Foxconn. Indeed, the prospect of landing this plant was used as a cudgel to scare up votes. Lansing politicians went so far as to amend the New MEGA proposal to sweeten the potential rewards for a company that creates 3,000 jobs in the state, clearly aimed at Foxconn.

Despite what their manifesto said, it is clear that size does matter to Republicans. There is nothing small business-like about these bills, nor do they refrain from wasting money trying to ferret out economic winners from losers. The legislation itself is explicit about who is favored and who is not. The Gilbert bill is developer-specific and the second one prohibits certain industries from participating in the program. It also sets up Lansing bureaucrats to pick certain projects over others within favored industries.

What makes these giveaways all the more offensive is that they were both passed after Republicans failed to secure a personal income tax for everyone. Eleven of the 12 Republicans who voted against a tiny tax cut for everyone voted in favor of subsidies for billionaire Dan Gilbert and few other developers. So much for support of “a broad-based economic environment,” to quote the Republican action plan.

The primary Gilbert-friendly legislation (SB 111) passed the Senate with 21 yes and only six no votes from Republicans. On the House side, it garnered 44 yes and 19 no votes from the same party. The New MEGA law was adopted with 22 Republicans yes votes in the Senate and 40 voted in favor in the House.

Democrats are no better. Like the Republican action plan, their official statements swear off special favors for business. Their official platform reads:

We support the adoption of a tax structure that is fair to everyone… With billions in corporate welfare, subsidies, tax shelters and tax cuts, large corporations and the wealthiest individuals pay less than their fair share of the tax burden … Our tax system should be one where the burdens are shared proportionately and benefits everyone, not just those at the top. [Emphasis added.]

Despite written hostility to corporate handouts and concern about the “wealthiest individuals” paying less than their fair share, Democrats overwhelmingly supported each piece of legislation.

No Democrat in the Michigan Senate voted against the Gilbert bill. Only three did so in the House. Not a single Democrat voted against the New MEGA legislation in the Senate and only 13 voted against it in the House.

Despite their written claims suggesting otherwise, Lansing politicians have overwhelmingly shown they support corporate handouts. This is simply disrespectful to the vast majority of workers who have taken them at their words — but end up paying more taxes so a wealthy few can pay less.


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New Corporate Welfare Proposal is Unfair