From Michigan NPR:
Michigan lawmakers are agreeing to award more taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. incentives for economic development this year, as long as the state reports the number of jobs created and retained by companies getting the tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. s.
For decades, Michigan has followed the path of heavy taxes on business coupled with generous tax reduction packages for selective industries. This government-picking-winners approach has been rigorously followed as the state economy continues a decline that’s been occurring for about a decade.
There’s another option, at least for states other than Michigan. A far more effective approach is to systematically improve the business tax climate for the long term so as to improve the state’s competitiveness, by repealing all incentives and subsidies. The tax code would thus be used just for raising revenue, not for changing economic behavior. Government officials should spend their time running the government and not running around the country offering deals to businesses.Share