Officials with the incoming Snyder administration say they are looking through the state’s tax code in an effort to identify tax breaks and loopholes that can be eliminated.
This sounds like a sensible way to approach the state budget deficit — this year Michigan handed out $36 billion in tax breaks, more that it collected in taxes altogether.
Despite the enormous costs involved, tax breaks are hardly discussed during the annual budget-making process.
Recent reviews have indicated that some of the tax break programs provide little or no benefit to the state.
In April a state auditor general’s report on the tax credits granted by the Michigan Economic Development Corporation’s Strategic Fund found that some of the companies given millions in tax credits have not lived up to their job creation promises. The auditor general also said that the board charged with overseeing the credits does not have an adequate system of monitoring for compliance.
A study commission by the Michigan Education Association also found that the Michigan Economic Growth Authority tax credits, the Renaissance Zone Act credits and the film credits had negative results in terms of job creation.
The MEA study found that 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.”
Governor-elect Rick Snyder is expected to lay out a strategy for addressing the state’s budget problems during a state of the state speech in mid-January.
In a speech last month he indicated that cuts in public employee compensation will be a priority.