Apparently, small business owners in Michigan have seen enough of “good jobs” promises through targeted tax incentives that “they know they don’t work.” That’s the word today from a major small business organization in Michigan, the National Federation of Independent Business, or simply the NFIB.
The skepticism comes in reaction to legislation reported out of the Senate Economic Development Committee that would “create a new scheme of diverting tax revenue from employer payroll withholding to companies that are approved by the Michigan Strategic Fund.” The intended purpose of the proposed legislation, Senate Bills 242, 243 and 244, is to attract companies to Michigan with the targeted tax breaks.
Charlie Owens is State Director of the NFIB. He says, “While we do not doubt the good intentions behind this legislation, they are a distraction and departure from the successful fiscal policies that have dramatically improved Michigan’s overall economic climate for all businesses and citizens of our state.” Owens adds, “It is disappointing to see the legislature drift back toward these quick fix economic development programs while broad based overall tax reform has been proven to be the better approach.”
Owens said that companies lured into the state by targeted tax incentives often end up being direct competitors to established businesses that have been in the state for years providing jobs and paying taxes without special treatment or tax breaks.
As Owens sees it, “Rosy job creation data provided by advocates of these programs rarely account for the job displacement that can occur under these circumstances.” He predicts, “In the future, when state budgets are stressed due to an economic downturn and tax revenues have been diverted to private companies, all Michigan business and citizens will end up picking up the tab for the shortfall through general tax increases and/or budget cuts.”
Owens pointed out that targeted tax handouts to select industries and individual companies through the MEGA program, and refundable tax credits baked into the old Michigan Business Tax, “were the hallmark of the failed Granholm administration and Michigan’s lost decade.” He argues, “Even now, current budgets are stressed trying to account for billions of dollars given away during the last big ‘good jobs’ program.” He concludes, “We need to learn from the mistakes of the past and stick with what works over the long run.”
NFIB is the nation’s leading small business association, with offices in Washington, D.C. and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small and independent business owners a voice in shaping the public policy issues that affect their business. NFIB’s mission is to promote and protect the right of members to own, operate and grow their businesses. More information is available online at www.NFIB.com/newsroom.
