Monday, February 18, 2008

Michigan's Economic Development Law in need of Reform

Right now, it has business shop outside Michigan before they can get a tax break to expand here.

Not very smart:
MEDC: Incentives today drive site searches out of Michigan by Nathan Bomey
Michigan Economic Development Corp. officials hope to change a state statute dictating that local companies must consider relocating in another state before getting tax credits to expand. The policy, often referred to as the "but for
clause," has been widely criticized - although generally behind the scenes,
given the sensitivity companies face in the tax credit approval process. The
state statute could only be changed by legislative action.
MEDC President and CEO James Epolito told Business Review that the idea
behind the policy is reasonable. But he said the statute itself doesn't make
"To be honest with you," Epolito said, "I think we're going to remove that in
future legislation."
The statute effectively requires companies seeking tax credits to expand to
prove that they have considered completing the expansion in a different state.
"Under the current process we're essentially encouraging businesses to
proactively look for incentives in another state, which can be
counterproductive," said Bridget Beckman, MEDC spokeswoman.

Indeed. While such a search is designed to have companies say "give us a tax credit or we'll move our expansion elsewhere", now, when we need every job and bit of expansion we can get, here in the state with the highest unemployment in the nation, such a policy is dangerously outmoded.

We should give tax credits for businesses that create more jobs here. Better yet, instead of credits we need to reshape and change the tax and regulatory (read governmental) environment to make Michigan much more business and expansion friendly to try and turn around this State recession.

While Michigan wants to be first in the nation, being first in unemployment and foreclosures is nothing to be proud of, and we need positive change to end that dismal ranking.

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