Tax Incentives Dissected; Where is the Media? Covering the Parade...

Why are tax incentives failing to give Michigan an economic boost? The Anderson Economic Group’s study released this month was commissioned mysteriously by the Michigan Education Association and the National Education Association, and we couldn’t be happier to see them all in the same space. Patrick Anderson’s dead-on editorial piece in the Freep last week cites, among other things, “a troubling lack of transparency in reporting the results of these major taxpayer investments.”
And from the report, which we are trying to get permission to post here, the authors say "There is currently no proper, publicly-available inventory of business tax incentive programs. Such an inventory should list the programs, statutory authorizations, intended purposes, eligibility criteria, nominal or estimated amount of tax revenue foregone, and nominal or estimated effectiveness in attaining the intended purpose."
In the Freep op-ed, Anderson goes on to mention that the state’s tax-based programs, which include tax abatements for manufacturers to update facilities, MEGA grants for some companies and the tax breaks for the film industry have also been plagued by that lack of a compilation of these tax breaks and no independent agency to collect the information,
He could have also mentioned something else: Where the Hell are the newspapers that used to dog governments and make them accountable?
Since you asked…
The Lansing State Journal has no statehouse presence, instead opting to use its talent for stunning stories such as “Walk to School Day a healthy step for kids.”
The Detroit News, which has a small statehouse bureau, finds it important to cover a parade and run a story “Thousands crowd downtown for Race for Cure.” We could have found a better use for that space.
The Grand Rapids Press blows the lid off a new scheme with a story, “Michigan state parks offer novices camping lessons,” which is a rewrite of a story the News ran in April. Who didn't do their homework?
Lightweight stories can add to a news product's value. But when a dearth of coverage shows up repeatedly, it becomes apparent that resources are being directed away from actual news and more toward features. And Anderson's report exposes the glaring lack of a real news industry.
We’ve explained the demise of the old news model, which was brought about not only by the rise of the Web, as most newspaper folks want you to believe, but by the people who have decided to pass by the burning building on the way to cover the parade.
The Anderson report is a terrific work, although we feel the authors missed one aforementioned crucial element, that of a derelict news industry.

MEGA addition

The Michigan Economic Growth Authority is overseen by a board of eight. Half of them are major donors to Granholm’s two gubernatorial bids. Who do you think they will follow in terms of recommendations for tax breaks?
These board members include MEGA chair James C. Epolito, who is also president of the Michigan Economic Development Corporation. He donated the maximum $3,400 in 2004 and his wife, Deborah, kicked in another $250 in 2006.
Kirk T. Steudle, head of MDOT, has donated $4,800 to Granholm’s war chest since 2004.
Cullen DuBose also stepped up to the political ass-grab plate with a $3,400 donation in 2005.
And Stanley “Skip” Pruss outdid them all with $8,500 in Granholm donations over the past six years.

MEGA tax breaks for political pals in Michigan

The Michigan Economic Growth Authority was created in 1995 during Gov. John Engler’s administration. Somehow, it went off the tracks under a thick fog of secrecy and stunningly inept bureaucracy (what other kind is there?). The idea was to offer tax incentives to businesses to companies looking for a home, and in 1995, the targeted foes were Ohio and Indiana, which were both giving large tax breaks. It was voted in with a sunset provision of Dec. 31, 1998, which never happened. The Wall Street Journal in an editorial called MEGA, aptly, a “governor’s gimmick." Engler fired back with a letter to the editor: “Those who label MEGA as a vestige of "failed industrial policy" don't understand the reality of the marketplace and what it takes to succeed.”
Among the first companies to receive the break was Borders, which opened its first store in Ann Arbor in 1971. In 1995, its corporate hq was still in Connecticut. It wanted to come home. Would it have without a tax break? Most likely. Have you seen its latest performance reports?
Today, MEGA and tax breaks for businesses are the target of two bills that aim to shine a light on just who is getting these breaks and how. SB 71 passed the Senate 36-0. It requires an annual report from MEGA be given to the legislature to include “the amount of capital investment and the number of jobs required to be created or retained” by each business that enters into a tax break agreement with the Authority.
SB 72 requires the Department of Treasury to prepare and post on the Internet a list of every tax credit available under the Michigan Business Tax, and to submit to the legislature a report showing the number of taxpayers who claimed certain types of credit, including their names and addresses. This one also passed the Senate, 22-14.
Since Gov. Jennifer Granholm succeeded Engler in 2001, there has been concern that many of these tax breaks were given to pals of the administration and ignored smaller businesses because they did not cause headline-drawing job opportunities. The two bills pending in the state House would give citizens some idea of just who is not paying taxes and why. Most MEGA awards are political; at its last board meeting, MEGA handed out tax breaks – 100% for ten years - to Great Lakes Towers, a new wind turbine tower manufacturing company that has zero employees right now. Another recipient was Atwell-Hicks, LLC, a Land Development Consulting firm that is already based in Michigan. The tax break was handed over for its new alternative energy plant.
We can hope these bills will make it through so that more people can see the travesty that these tax giveaways are, and the bad business and political favoritism that MEGA is engaging in.