by Scott McClallen
A bipartisan bill aims to revive a killed business subsidy incentive that they say will spur new job creation in Michigan.
State Reps. Mark Tisdel, R-Rochester Hills and Angela Witwer, D-Delta Township, introduced House Bills (HB) 5425 and 5426 that aim to form the Michigan Employment Opportunity Program (MEOP) to provide incentives for business developments similar to the Good Jobs for Michigan (GJFM) program, which expired in 2019.
“The Michigan Employment Opportunity Program will form a public-private partnership to bring good jobs to our state,” Tisdel said in a statement. “Government can make it easier for businesses to invest in our communities and support more Michigan workers, bringing economic growth – and the revenue that comes with it.”
The MEOP would allow businesses to keep a portion of income tax withholdings from the added employees for a limited time. The duration and amount of the incentive for a project would vary based on county population, the number of jobs created, and wage level. Businesses would be required to certify that the job-creating project would not occur without the incentive.
“Our plan builds on a successful record of pro-business, pro-worker programs,” Witwer said in a statement. “The COVID-19 pandemic disrupted our economy and displaced employees, and newly created jobs will provide hope and opportunity for families throughout Michigan in the days ahead.”
The plan would include some smaller projects in less populated areas of the state. Counties would be divided into three population tiers for determining program eligibility: (1) 250,000 or more residents, between (2) 90,000 and 250,000 residents, and (3) fewer than 90,000 residents.
Businesses would be eligible for up to 100% of income tax withholdings for up to 10 years for developments that create:
At least 3,000 jobs in tier one counties, at least 500 jobs in tier two counties, or at least 250 jobs in tier three counties, if the average annual wage is at least equal to the average wage in that region of the state; or
At least 250 jobs in tier one counties, at least 100 jobs in tier two counties, or at least 50 jobs in tier three counties, if the average annual wage is at least 125% of the average regional wage.
A business would be eligible for up to 50% of income tax withholding for up to five years if a project creates at least 500 jobs in a tier-one county, at least 250 jobs in a tier-two county, or at least 100 jobs in a tier-three county if the average annual wage is equal to or greater than the regional average wage.
The Michigan Economic Development Corporation (MEDC) estimates that since 2017, GJFM spurred over $6.6 billion in private investment with a commitment to create more than 11,000 new jobs with an average wage of $31.51 per hour.
John Mozena, president of the Center for Economic Accountability, a nonprofit organization for transparent economic development policy, told The Center Square that despite Halloween creeping up, “it’s a little early to be bringing the zombies out,” referring to the dead Good Jobs Program.
“Nobody believes that [GJFM] was a positive thing other than people who are employed to promote the program,” Mozena said in a phone interview, adding that he believes the GJFM was costly and ineffective.
Mozenza argued that such corporate giveaways were ineffective, citing that that if a $7 billion subsidy can’t convince Amazon’s HQ2 to choose Bethesda, Md., over Arlington, Va., then this program likely won’t work either. Amazon cited Virginia’s better business climate in its decision.
“If $7 billion can’t move Amazon 10 miles, the subsidies created by this program are really unlikely to make any meaningful difference in company site selection,” Mozena said.
An Upjohn Institute for Employment Research study concluded between 75% and 98% of all subsidized investments would have happened without the subsidy.
Michael LaFaive, senior director of fiscal policy at The Midland-based Mackinac Center for Public Policy, tracked 230 incentives deals through the Michigan Business Development Program and found “the program did lead to additional jobs at firms receiving an incentive, but at a cost of $29,400 in incentives offered per job per year. “
The bills were referred to the House Committee on Commerce and Tourism.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
Photo “Mark Tisdel” by Mark Tisdel and photo “Angela Witwer” by State Representative Angela Witwer.
