Michigan House passes tax breaks for companies that add jobs

By DAVID EGGERT, Associated Press
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The Michigan Capitol Building in Lansing

LANSING, Mich. - Qualified companies that create at least 250 jobs in Michigan would receive tax incentives under legislation passed in a crucial vote by the House on Wednesday, setting the stage for final Senate approval later in the day.

Gov. Rick Snyder is pushing for passage of the "Good Jobs" tax breaks this summer, as Michigan tries to persuade Taiwanese electronics company Foxconn to build a 5,000-employee plant in the state.

The main bill passed 71-35, with 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 stay competitive 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, pro 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 picking winners and losers. The Mackinac Center for Public Policy, a Midland-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.

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