A new study (PDF) commissioned by the Michigan Education Association concludes that many of the tax incentives given by the state of Michigan do little to create jobs. The study looked at eight of the most popular and commonly used tax incentives, including the tax breaks for making movies and the Michigan Economic Growth Authority credits, and found that two of them had positive results, three had mixed results and three had clearly negative results in terms of job creation and tax dollars lost.
“The results clearly indicate that eliminating ineffective tax incentives would result in more jobs for Michigan workers and more revenue available to state and local governments,” said Patrick Anderson, CEO of the Anderson Economic Group, which carried out the study.
The three tax incentive programs with clearly negative results, according to the study, are the MEGA tax credits, the Renaissance Zone Act credits and the film credits. Those three programs “cost the state almost 25,000 jobs and $85 million in tax revenue per year when compared with an alternative policy of a small change in tax rates.”
The state of Michigan gives away a staggering $36 billion a year in tax incentives to spur economic growth, which is more than the total business taxes the state takes in. Gov. Granholm is proposing to have those programs sunset so that the legislature has to take another look at them every few years to see if they’re working. Studies like this one provide the data on which to make such decisions.