Michigan Doubles Down on Government-Led Economic Development

October 15, 2009

From Michigan NPR:

Michigan lawmakers are agreeing to award more tax incentives for economic development this year, as long as the state reports the number of jobs created and retained by companies getting the tax credits.

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.


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