Posted on 09/04/2009 4:46:36 AM PDT by SeekAndFind
A central belief in Washington and most state capitals nowadays is that government should "invest" in certain businesses—"clean tech," say, or manufacturing—to drive job creation. We hope it all turns out better than it has in Michigan.
For the past 14 years, Lansing politicians have offered $3.3 billion in tax credits through the Michigan Economic Development Corporation and spent another $1.6 billion in outlays to create and retain jobs. The subsidies have ranged from tax breaks for Hollywood, to money for new industrial plants, to millions for TV ads starring Jeff Daniels and Tim Allen talking about business and tourism in the state.
It's one of the largest experiments in smokestack chasing in American history, but one thing it hasn't done is create jobs. An exhaustive new 100-page study by the Mackinac Center for Public Policy, a Michigan think tank, has reviewed where all the money has gone and what came of it. The study finds that for every 100 jobs that were promised with these tax credits over 14 years, only 29 arrived. Dare we call this cash for clunkers?
Economist Michael Hicks, a business school professor at Ball State, calculated the rate of return on the corporate tax credits. He found that for every $1 million in tax credits awarded, there were 95 lost manufacturing jobs in the counties where the companies were located—a result that is "strongly statistically significant." There was no gain in personal income in these counties. Perhaps more jobs would have been lost without the credits, but what is undeniably clear is that the businesses that got the government loot were not magnets for other employers.
Many of these handout programs were started in 1995 by former Republican Governor John Engler, who we criticized at the time in "A Governor's Gimmick."
(Excerpt) Read more at online.wsj.com ...
Some considerations :
* Government initiated programs were responsible for 0.25% of all new jobs created in the last decade, according to study.
* In 2007 Michigan raised business taxes by $1.4 billion on other firms to pay for many of Gov. Granholm’s favored companies.
* Despite all the giveaways, Michigan was recently ranked as having the third most anti-business climate among states, in a survey of executives by CEO magazine.
* If Michigan had simply cut taxes for every business, as Mr. Engler did in the 1990s when the state briefly led the nation in new jobs, it’s a good bet unemployment would be lower.
The kicker might also be how Michigan paid for all those Jeff Daniels ads. The Michigan Economic Development Corporation is funded through a corporate tax.
So in a state with the highest unemployment rate in the nation at 15%, taxpayers last year gave out $48 million in subsidies to Hollywood millionaires.Jenny from the block sure has blown us away! Glad to say I now live in the great state of Texas. I wasn't born here, but I got here as fast as I could. God bless Texas!
PS: The great RINO Engler started this program so it is both parties that cannot help themselves.
Just lower taxes for everyone and get the hell out of the way. Cut the high corporate income taxes that are sending jobs overseas for heaven’s sake!
Sure it did.
The Michian Economic Development Corporation and their pet advertising agencies had a lot of jobs created in their little fiefdoms!
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