MEGA-Silly Tax Credits in Michigan

July 16, 2008

The Michigan Economic Growth Authority (MEGA) doles out tax credits and grants ostensibly to encourage out-of-state businesses to expand and relocate in Michigan. However, MEGA’s seven-person board seems to believe virtually any relocation is worthy of a grant and a tax credit.

As one example, MEGA announced today that International Bancard Corporation (IBC) received $50,000 in grants for training approximately 50 new workers. In addition, IBC will receive $1.1 million in tax credits, including a technology tax credit and waiver of planning and building fees associated with its move from Royal Oak, Michigan to Clawson, Michigan—a distance of 3.5 miles (at $314,285.71 per mile!). It might be a different story if the move were from one end of the state to the other, since the company would possibly be employing a whole new subset of the state’s population.

These credits and grants are probably a waste of taxpayer dollars for the state of Michigan, since they do not result in a net creation of new jobs—only jobs that may have been in Michigan even without the credits. Michigan would do better to make its tax climate more inviting to all businesses, not just selected businesses deemed MEGA-worthy.

Otherwise maybe all a business needs to do is move across the street to be eligible for a tax credit in Michigan.

Read more about business tax credits here and here.

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