Skepticism in the name of taxpayers has its limits, and Republicans in the state House are reaching theirs.
Four prominent business leaders — two of them rooted in the globally competitive auto industry — used a Michigan Chronicle event Thursday to urge lawmakers to pass a package of tax incentives touted by major business groups, unions and economic development officials statewide.
The bills would enable Michigan once again to play in the interstate competition for major jobs-producing projects. That could include a bid to land a $4.2 billion, 5,200 jobs investment by Taiwan-based Foxconn Technology Group. The world’s largest contract electronics manufacturer assembles iPhones in China for Apple Inc.
“We’ve got to get it done,” Lear Corp. CEO Matt Simoncini said, referring to the “Good Jobs for Michigan” incentives package. “We need to demand it gets done.”
He’s right. Now is no time for House Republicans, in the inimitable worlds of former British Prime Minister Margaret Thatcher, to go wobbly. Or to be shocked into inaction by the pricey hangover of the discarded Great Recession-era tax incentives that retained tens of thousands of auto jobs. Or to be deluded by the lower unemployment and higher corporate profits of recent years into believing everything’s just fine.
It’s not. Michigan’s “comeback” is proving less elastic and less robust than it used to be. Educational attainment lags rival states. Personal income growth between 2000 and 2013 grew at half the national average, according to Public Sector Consultants. Taxpayer obligations to current and former public employees are growing at a faster rate than incomes and property values.
Michigan’s rebound, impressive as it’s been since 2010, is constrained by the state’s inability to compete for jobs-creating investment. Too many rival states wield the kind of financial tools that can close deals, bolster their economies and feed a narrative of positive change.
Michigan needs some of that mojo, especially if it’s serious about credibly competing for the talent needed to be the national center of next-generation technology empowering mobility services and self-driving vehicles.
Business leaders and economic development officials from all corners of the state see this disconnect, unmistakably. It’s not at all clear, based on the slow walk of the House Tax Policy Committee, that enough House Republicans do.
That’s why business leaders and economic development professionals are turning up the heat by talking a little more than usual about the stakes, about the live prospects that could die if the incentives are not passed by the House and signed by Gov. Rick Snyder.
The day after the Detroit Regional Chamber’s Mackinac Policy Conference concluded earlier this month, the governor and Detroit Mayor Mike Duggan flew to Japan to meet with Foxconn officials, The Detroit News first reported. And the governor used a Mackinac press conference touting the so-called “Good Jobs” legislation to warn that the state “could lose some opportunities if we don’t get this done in the next month or so.”
The legislation would enable companies creating new jobs in the state to capture personal income tax revenue associated with the new hires, subject to annual audits and sustained investment. Companies investing in Michigan would not be entitled to capture tax revenue until minimum targets are met.
Is Snyder’s public warning leverage? Sure. But it also has the distinct possibility of being true, given the economic ferment fueled by strong equity markets, improving growth rates and promises of tax cuts and regulatory reform coming from Republican-controlled Washington.
And that could (or should) change political calculations for House Republicans in Lansing wedded to a free-market ideology not necessarily built for the incentives arms race practiced in state capitals across the country — and presumably endorsed by the president of the United States.
The new “America First” zeitgeist of Trump-era Washington gives foreign and domestic corporations added incentives to take second looks at investment in the United States generally and in the industrial heartland particularly. Creating jobs in middle America now is as much good politics as it is good business.
Business increasingly understands this. How could it not — especially in manufacturing-heavy Michigan — considering the president’s fixation with jobs, investment and trade deals he blames (too easily) for undercutting the mythical American worker?
The real world is more complicated than that. Time for House Republicans to wise up and move, or prepare to explain to their constituents why it’s perfectly OK to let the big ones get away.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.