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Michigan Bills Would Establish Job Creation Incentive Program

Posted on Oct. 25, 2021

Michigan House lawmakers have introduced bipartisan legislation that would create a tax incentive program to lure new jobs to the state.

H.B. 5425 and H.B. 5426 — introduced October 20 by Reps. Angela Witwer (D) and Mark Tisdel (R) — would establish the Michigan Employment Opportunity Program to allow companies that create jobs and meet specific criteria to keep up to 100 percent of income tax withholding for the added employees for up to 10 years. 

“The Michigan Employment Opportunity Program will form a public-private partnership to bring good jobs to our state,” Tisdel, majority vice chair of the Tax Policy Committee, said in a release. “Government can make it easier for businesses to invest in our communities and support more Michigan workers, bringing economic growth — and the revenue that comes with it.”

Under H.B. 5425 and H.B. 5426, counties would be divided into three tiers according to their population. Tier 1 would be for counties with 250,000 or more residents, tier 2 for counties with between 90,000 and 250,000 residents, and tier 3 for those with fewer than 90,000 residents.

The legislation would allow eligible companies to keep up to 100 percent of their income tax withholdings for up to 10 years for developments that create at least 3,000 jobs in tier 1 counties, 500 jobs in tier 2 counties, or 250 jobs in tier 3 counties. Each job would be required to pay at least the average wage of the region of the state where the company is located.

Companies would also be qualified to keep 100 percent of their income tax withholdings for up to 10 years if they create 250 jobs in tier 1 counties, 100 jobs in tier 2 counties, or 50 jobs in tier 3 counties and pay at least 125 percent of the region’s average wage.

Businesses whose projects create at least 500 jobs in tier 1 counties, 250 jobs in tier 2 counties, or 100 jobs in tier 3 counties that pay at least the region’s average wage could qualify to keep up to 50 percent of their withholdings for up to five years.

According to the release, the program is intended to replace Good Jobs for Michigan, a similar program that expired in December 2019, but would also include smaller projects in more sparsely populated areas of the state.

Good Jobs for Michigan was approved in July 2017 as lawmakers sought to lure Taiwan-based electronics company Foxconn Technology Group to the state. The company ultimately chose to locate its business in Wisconsin, which authorized more than $3 billion in tax incentives for the company to build a $10 billion factory in the state and hire up to 13,000 full-time workers. Wisconsin later renegotiated a scaled-back deal after the company missed benchmarks and narrowed the scope of its plans. 

The Michigan Economic Development Corp. estimates that Good Jobs for Michigan generated more than $6.6 billion in private investment and approximately $1.56 billion in net revenue for the state while it was active. But Michael LaFaive of the Mackinac Center for Public Policy had urged lawmakers to allow the program to expire, arguing in a 2019 blog post that research shows that jobs programs like Good Jobs for Michigan are “ineffective, expensive, and unfair."

Earlier this year, Gov. Gretchen Whitmer (D) called on the Legislature to renew Good Jobs for Michigan to boost job growth in the state as part of her COVID-19 recovery plan.

Neither Tisdel's nor Witwer’s office responded to requests for comment by press time.

H.B. 5425 and H.B. 5426 were referred to the House Committee on Commerce and Tourism.

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