Select Tax Breaks For State 'Renaissance Zones' Program Returns One-Fifth of Predicted Jobs

Only one-third of the expected private investment generated

Renaissance Zones exist in almost half of Michigan's counties.

Only a third of expected private investment and a fifth of expected jobs have been delivered among six companies selected by the state of Michigan to receive special tax breaks.

An additional company is in the process of being removed from the program.

These tax breaks came as part of the state's Renaissance Zones program. Companies selected for the program have been exempt from the Michigan Business Tax, state education tax, personal and real property taxes, and local income taxes. 

"Renaissance Zones are selective abatements to areas and businesses that eliminate virtually all state and local taxes," said James Hohman, a fiscal policy analyst at the Mackinac Center for Public Policy.

"While it would be nice if policymakers extended this courtesy to all taxpayers, they would only like to grant these special favors to selected businesses and areas."

Seven companies have been granted Renewable Energy Renaissance Zone status. Excluding Energy Components Group, which is in the process of being removed from the program, over $826 million in private investment was expected among participating companies. According to the program’s latest progress report, only $268 million has been delivered.

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As is the case with other government-run economic development programs, job creation has not come close to original program goals. While the program was projected to create 1,061 jobs, only 220 jobs have been created.

Some companies, such as Dow Chemical and Frontier Renewable Resources, have not reported a single new job as a result of receiving these tax breaks.

The Renaissance Zones program was created in 1996 by a bill signed into law by Gov. John Engler. The renewable energy category was added to the program in 2006 by Gov. Jennifer Granholm.

Renewable energy is one category among many for which a company can qualify for these special tax exemptions. Other categories of Renaissance Zones include urban, rural, military, agricultural processing, ethanol projects, pharmaceutical recovery, redevelopment, forest products and tool and die.


See also:

Corporate Subsidy Program Lives On Despite Lackluster Results

State Program Awards $67 Million, Creates One-Third of Projected Jobs

The State as Venture Capitalist: Michigan Fund Loaned $7.7 Million, Creates Only 20 Percent of Promised Jobs

Related Articles:

2016 Michigan Energy Roundup: Renewable Energy

Flimsy Job Projections Used to Promote Selective Business Tax Breaks

Price of Electricity Up 85 Percent Since 2001

Awash In Millions In Government Subsidies, Solar Company Still Shuttered Michigan Plant

Puffery And Spin The Norm When Industry Advocates Are Protecting Tax Favors

The Allure of Corporate Welfare

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