MIDLAND, Mich. — The Michigan Economic Development Corporation must fully disclose the amount of taxpayer subsidies it has offered to General Motors, the Michigan Supreme Court ruled today. The court’s unanimous opinion in Sole v. MEDC is a win for taxpayers and transparency that draws substantially on arguments the Mackinac Center Legal Foundation made in its amicus brief.
In a significant rebuke to GM and the MEDC, the Court held that the MEDC must disclose, without redactions, the total amount that GM has been promised in corporate subsides. As of 2020, the MEDC admitted it could still owe up to $2.3 billion to GM. This is in addition to what the department has already given GM, which is not currently known.
“Taxpayers deserve to know who is receiving their money,” said James Hohman, director of fiscal policy at the Mackinac Center for Public Policy. “Offering subsidies to select companies is ineffective at creating jobs, unfair to companies that don’t get special deals and expensive to the state budget.”
These refundable tax credits were awarded under the Michigan Economic Growth Authority. These credits, which go beyond what the company owes in taxes, essentially give cash directly to companies. Information about MEGA tax credits were public until 2009, but now only a handful of lawmakers have access to the full amounts promised to select companies. Both the MEDC and GM have refused to disclose the full amount of tax credits promised, including those already received.
“The Michigan Press Association is pleased that the Michigan Supreme Court is protecting transparency,” said Lisa McGraw, public affairs manager for the Michigan Press Association, which signed on to the Mackinac Center’s amicus brief. “The taxpayers of Michigan are well served when they can access information about how much of their money is being spent and why.”
Many of the legal arguments the Mackinac Center made in its brief were used in the opinion. The brief was specifically requested by the Michigan Supreme Court.
“Since the state’s beginning, Michigan’s constitution has recognized the public’s right to track the state’s expenditures,” said Patrick J. Wright, director of the Mackinac Center Legal Foundation and vice president for legal affairs at the Mackinac Center for Public Policy. “The MEDC’s lack of transparency has been an attempt to thwart this long-standing protection in order to benefit a favored corporation. The opinion clarifies that the billions of dollars in corporate subsidies given by the MEDC to GM must be made accessible to the public. This will apply to subsidies given to other companies as well.”
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
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