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House, Senate Approve Controversial ‘Good Jobs’ Tax Incentive Package

July 12, 2017

Courtesy MIRS News

House members gave Gov. Rick Snyder his three-bill Good Jobs for Michigan tax incentive package Wednesday by comfortable 71-35 margins.

Senators quickly concurred with the House amendments, voting 29-5 on SB 0242 and SB 0243 and 30-4 on SB 0244, sending the bills to the governor. 

The bills became controversial three weeks ago when the Republican caucus accused the Governor of making deals with the Democrats they couldn’t live with. Snyder and House Speaker Tom Leonard (R-DeWitt) met last Tuesday to resolve those differences ahead of the vote, although Leonard still counted among the no votes. 

So did the rest of House leadership, including Speaker Pro Tem Lee Chatfield (R-Levering), Majority Floor Leader Dan Lauwers (R-Brockway), Associate Speaker Pro Tem Gary Glenn (R-Larkin Twp.) and Assistant Floor Leader Lana Theis (R-Brighton). Only Associate Speaker Pro Tem Jim Tedder (R-Clarkston), who was responsible for shepherding the package through the House, supported the bills. 

“I was happy to see such a strong bipartisan vote and that the vote was allowed to proceed even though we knew the Speaker and some others were personally no votes. The vote was allowed to proceed so that our voices could be heard,” said Rep. Ben Frederick (R-Owosso). 

The issue did split the parties — 39 Republicans in the House voted for the bills while 22 opposed; 32 Democrats supported the package and 13 voted against. 

The package was less controversial in the Senate. 

“Given that the other states around us have these tools, we needed to have them as well. If it were a perfect world, and the other places competing against us didn’t have these things, we wouldn’t need it either,” said Senate Majority Leader Arlan Meekhof (R-Olive Twp.). 

The bills would allow a company seeking to relocate to Michigan to collect 100 percent of the state income tax withholdings for new employees for 10 years if the company creates at least 3,000 jobs at the average salary level for the local prosperity region. A company could collect half the taxes if it creates 500 jobs at the average income level. And for companies that create 250 new jobs at 125 percent of the region’s average salary level, the break would be 100 percent of income tax withholdings. 

The break is considered critical to attracting a $4.2 billion investment from the Taiwan-based Foxconn Technology Group, creating an estimated 5,000 jobs, for an assembly plant to make liquid-crystal display screens for autos and aviation. 

But the plan drew a good deal of opposition in the House floor debate. 

“The choice on this bill is very clear. It is a choice for or against taxpayers,” said Rep. Martin Howrylak (R-Troy). “Here we go again, taking from the poor and giving to a select corporate class. Here we go again, picking and choosing winners and losers. Here we go again, engaging in crony capitalism. Here we go again, doling out corporate welfare.” Rep. Steven Johnson (R-Wayland Twp.) called the tax breaks “outrageously awful.” He said similar arguments had been used to support passage of previous tax incentive programs. “Overwhelmingly, they do not work,” Johnson said. 

Rep. Jason Sheppard (R-Lambertville) argued in support of the bills that the state has to operate in a “reality world today where we are essentially in an arms race not only with bordering states, but the entire country and the world. I have seen first hand other states offer great incentives programs to lure businesses to keep companies from choosing Michigan first. If we do not give our state organizations consistent and meaningful tools to attract new industry here to create jobs, we will always be at a disadvantage.” 

Rep. Gary Howell (R-North Branch) questioned what the state is doing to the individual taxpayer. 

“In 2011, this legislature repealed the Michigan business tax . . . To pay for that dramatic decrease in corporate taxes, we chose to tax the pensions of our retirees in Michigan. We chose to take away the child tax deduction for our hard-working young families in Michigan. We reneged on the promise of rolling the income tax back to 3.9 percent. We did all that in the name of giving a break to business. Now here we are again. We’ve got some wonderfully euphemistic names for them. We call these things ‘Good Jobs,’ all those feel good names for the same thing we have done in the past and failed miserably, which is to give away the individual taxpayers’ money to large corporations,” Howell said. 

Yousef Rabhi (D-Ann Arbor) called the package corporate welfare. “This is not about good jobs. This is part of a race to the bottom,” he said. 

Because of the way the bills are written, keying on the average wages paid for the new jobs, the incentive might not result in good jobs after all. 

“If you do the math, it means you could have a select few executives getting paid lots of money and the rest the staff could be getting minimum wage with no benefits,” Rahbi said. 

Rep. Brian Elder (D-Bay City) said Democrats stepped into a leadership void to make sure the bills had enough votes to pass. 

“In the field of economic development, it is important that you be laser focused on results,” Elder said. “You have to take a hard-nosed look at the facts and ask three basic questions. One, what do you get? Two, what do you have to give? And three, is it verifiable? By these objective criteria, this package passes muster.” 

He contended that because the tax breaks come out of income taxes, the burden will be carried by the state government, not local governments, which typically have been the ones to give up revenue in the past when incentives have relied on property tax breaks. 

“It is entirely appropriate that the largest government entity, which is most capable of shouldering the burden, should pay for these incentives,” Elder contended. 

Elder said the amendments Democrats insisted on to make sure the package got the votes it needed included a sunset on the incentive in December 2019, making sure local governments get to vote on whether the incentive is awarded to a particular company, and that there has to be a good faith effort to hire local people to fill the new jobs. 

Republicans voting against the bills included Reps. Thomas Albert (R-Lowell), Julie Alexander (R-Hanover), Sue Allor (R-Wolverine), Tom Barrett (R-Potterville), John Bizon (R-Battle Creek), Chatfield, Laura Cox (R-Livonia), Glenn, Shane Hernandez (R-Port Huron), Michele Hoitenga (R-Manton), Pamela Hornberger (R-Chesterfield Twp.), Howell, Howrylak, Johnson, Tim Kelly (R-Saginaw), Lauwers, Leonard, Aaron Miller (R-Sturgis), Jeff Noble (R-Plymouth), John Reilly (R-Oakland), Jim Runestad (R-White Lake), and Theis. 

Democrats voting against the bills included Reps. Darrin Camilleri (D-Brownstown Twp.), Stephanie Chang (D-Detroit), Pam Faris (D-Clio), LaTanya Garrett (D-Detroit), Christine Greig (D-Farmington Hills), Abdullah Hammoud (D-Dearborn), Jon Hoadley (D-Kalamazoo), Frank Liberati (D-Allen Park), Kristy Pagan (D-Canton), Rahbi, Rose Mary Robinson (D-Detroit), Sylvia Santana (D-Detroit), and Robert Wittenberg (D-Oak Park).

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