LANSING – The single best thing the state can do to increase the number of jobs is to get rid of the Michigan Business Tax surcharge, House Republicans said Tuesday, and a phaseout of that should include capping the state’s economic development credits and expanding who is eligible to receive them.
House Republicans outlined that goal as they released a 32-page task force report on jobs Minority Leader Kevin Elsenheimer (R-Kewadin) called the “blueprint for future Republican majorities.”
The jobs crisis, which has grown every day, has produced a state full of struggling families and hurting communities, said task force chair Rep. John Proos (R-St. Joseph). At the same time other states “have taken our playbook (on economic development) and are using it against us. We’ve lost flexibility and transparency.”
Saying government isn’t going to create the jobs but can create an environment that fosters job growth, Republicans said a series of steps needs to be taken to make Michigan’s economic development plan competitive again.
One of those steps is capping tax credits provided in the future. The report noted the governor’s 2010 budget appendix on state tax credits, deductions and exemptions showed there is about $350 million in claims to be made against brownfield redevelopment, film and Michigan Economic Growth Authority credits. Between 2008 and 2010, claims against the MEGA credit increased by 18 percent, while claims against the brownfield credit spiked by 73 percent, according to the report.
If the state capped the MEGA credit at $75 million, the brownfield credit at $50 million and the film credit at $100 million, the state would save more than $100 million annually.
“The surcharge should be eliminated, but this is simply not an economic reality at this time,” the GOP report said.
Instead, the caucus is backing HB 4651 and SB 1 , which phase out the surcharge over a period of two to three years (each bill has a different timeline).
Republicans also said they want to see state economic development credits opened to all businesses, with the Michigan Economic Development Corporation publishing which dates credits will be offered and the state comparing the businesses applying for them to provide “incentives to the businesses with the best chances for success.”
Funding for existing tax incentives would also be consolidated under the Republican plan, with increments going out four times a year.
House Speaker Andy Dillon (D-Redford Twp.) didn’t endorse any specific proposal in the Republican report, but issued a statement saying, “Any proposal that aims to create jobs deserves serious consideration in the Legislature. House Democrats are working on ideas to help Michigan’s small and startup businesses and to invest in a Michigan workforce with the skills to attract new jobs. We need to work together in a bipartisan manner to strengthen Michigan’s economy and bring good jobs to our state.”
Wanting to ease the burden for businesses to apply for the economic development credits, Republicans are calling for a tiered system for MEDC applications and elimination of application fees.
“Assuming that only businesses who are invited to (and are likely to receive credits) apply, the elimination of the MEGA application fees would have saved at least $530,000 for Michigan job providers in 2009,” the report stated. “This savings is even larger when other credits are included and businesses that could not afford the application fee begin to apply.”
The Republican plan also calls for more transparency in MEDC’s actions with reports to the Legislature on which projects are denied credits compared to those that are awarded.
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