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Amid courting of Foxconn, Michigan House adopts tax breaks for job creators

By DAVID EGGERT
Associated Press

LANSING, Mich. (AP) — Even as Wisconsin officials court the technology giant Foxconn, their counterparts in Michigan were moving toward approving a law that would provide tax incentives to companies that create at least 250 jobs.

The legislation was passed by the state’s House on Wednesday, setting the stage for final Senate approval later in the day.

Michigan Gov. Rick Snyder is pushing for the adoption of the “Good Jobs” tax breaks this summer, as Michigan tries to persuade the Taiwanese electronics company Foxconn to build a 5,000-employee plant in the state. Foxconn is also believed to be considering a site or sites in Wisconsin.

In Michigan, the main tax-break bill passed on a 71-35 vote, garnering a mix of Republican and Democratic support.

The Republican governor and GOP-led Legislature shifted Michigan away from providing economic-development tax incentives in favor of a smaller pot of grants and loans when he took office six years ago. But he is open to them now and says Michigan needs to ensure it is able to compete with other states for large projects.

Businesses could qualify for the incentives in one of three ways:

  •  Creating 3,000 or more jobs that pay at least the average regional wage. They could keep all of the employees’ income-tax withholdings for 10 years.
  • Creating at least 500 jobs that pay the average regional wage or more. They could keep half of the income taxes for five years.
  •  Creating 250 or more jobs that pay at least a quarter more than the average regional wage. They could keep all of the income taxes for 10 years.

The Michigan Strategic Fund could strike up to 15 deals a year. No more than $200 million in incentives could be awarded — a provision that backers say distinguishes the program from the old uncapped Michigan Economic Growth Authority program, for which the state is on the hook for billions of dollars and which also applied to companies that retained jobs.

Retail stores, professional-sports stadiums and casinos could not qualify for the new tax breaks. Lawmakers would have to reauthorize the program if they want it to extend beyond 2019.

Some conservatives have criticized such targeted incentives as government attempts at picking winners and losers. The Mackinac Center for Public Policy, a Midland, Mich.-based conservative think tank, has long criticized the use of such incentives as a way for politicians to issue “press releases” about promised new jobs that do not pan out.

But economic development officials say Michigan in many cases is overlooked by corporations looking to move or expand because site selectors automatically dismiss the state’s incentives as too weak.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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