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Michigan Business Owner: Tax Reform Means 'Our Company Will Create Jobs'

Kalamazoo-based business will hire people 'directly' because of MBT elimination

State Democratic and union leaders are saying that lower business taxes will not “guarantee” job creation, but one business leader says that is exactly what he intends to do.

After a Republican Legislature passed a state budget cutting funding from the School Aid Fund in order to replace the Michigan Business Tax with a flat 6 percent corporate tax, many Democrats went on the attack.

House Minority Leader Rick Hammel, D-Mt. Morris Township, told MIRS Capitol Capsule (subscription required), “[Republicans] raided the School Aid Fund… to pay for their 82 percent tax break for giant corporations with no guarantee of a single new job."

Earlier this year, Senate Minority Leader Gretchen Whitmer, D-East Lansing, wrote an Op-Ed in the Detroit Free Press stating, “[The tax cut proposal] lacks any evidence it will create jobs or Michigan investment. …”

But Kalamazoo business owner David Rhoa said creating jobs is precisely what his business is going to do.

“Our company will be creating jobs directly because of this change in the tax code,” said Rhoa, the President of Lake Michigan Mailers.

Rhoa’s company is located near the Michigan-Indiana border and has locations in both states. He gave a presentation in 2007 warning that a tax hike then being prposed would result in businesses taking money out of Michigan and putting it into other states. He said then that Indiana's tax climate is much friendlier toward business.

“In 2007, I testified that Lake Michigan Mailers was looking for places to expand our business,” said Rhoa. “I said at the time that even though Michigan is, literally, our middle name, if we had to, we would find a place in Indiana or Ohio if [the Legislature] goes ahead with the tax increase.”

“So we made a multimillion dollar investment in Indiana because of what Michigan did to itself.”

Michael LaFaive is a policy analyst for the Mackinac Center for Public Policy. He said Rhoa’s story is not atypical for the state over the past few years.

“Taxes are an important variable in the job creation formula,” said LaFaive. “It’s economics 101, really.”

“Would you like more jobs in the state? Cut the price of creating them.”

Rhoa said the most important thing that Michigan did by overhauling the tax code was “telling businesses that this is a good place to do business.” He said the best thing government can do for business is: “Have a stable, predictable, equitable tax structure that promotes growth. And that growth creates economic development. And that economic development raises all boats.”

“As a business owner, I have two choices: I can pay the tax man or I can invest in my business. And I want to invest in my business.”

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See also:

Analyst: Gov's Tax Plan Could Kill 30k Jobs in First Year

A Good Tax Gone Bad?

Michigan Lawmakers Create New Business Tax That Remains Complex and Costly

Meet James Hohman, Assistant Director of Fiscal Policy at the Mackinac Center. James discusses his latest project, an analysis of Proposal 1, the proposal on personal property tax reform that will appear on the August 5th ballot. Read more about Proposal 1 here: http://www.mackinac.org/20246


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