Commentary
Lansing Politicians Put Favored Businesses Ahead of Everyone Else
Another $1.2B in favors approved this year
State lawmakers passed two programs this year to give the businesses they select taxpayer dollars. It’s the kind of policy that tells regular people that they don’t matter while the important people get to play by their own rules.
Our laws are supposed to set the guidelines for everyone to follow. These programs, by contrast, give the favored few an advantage. This is disrespectful to the people that have to pay for those favors.
Some policymakers think the state needs to award business subsidies because other states offer subsidies. They are under the mistaken assumption that these programs work. The favors they bestow cost real money and have economic effects as well. At best, such programs don’t create jobs; they transfer them and hurt everyone else in the process.
It’s not just the expense that matters. Favoring one business with taxpayer dollars means that they get advantages over other businesses competing in the same market.
To Lansing politicians, these new favors are small. The selected business owners get to keep some or all of the income and sales taxes generated at their businesses and developments. And, the politicians argue, this is costless to taxpayers because these expansions wouldn’t happen without taxpayer dollars in the first place.
But that kind of thinking breaks down when the idea is applied universally. Offering everyone else the same deal would bankrupt the state. When everyone lives or works in a place in which the builder gets income and sales tax revenue, the income or sales tax revenue is only collected by developers.
This transfer from everyone to a favored few ought to frustrate more than just budget analysts. The teachers being asked for salary concessions and the firefighters having their shifts limited should be as mad about this as any taxpayer who must pay for these programs.
These giveaways rob local governments of tax revenue. And while local governments face other fiscal issues, the problems posed by these new laws shouldn’t be written off, either. The two new programs approved this year give away another $1.2 billion in addition to the $7.6 billion in already-approved business subsidies. And that is in addition to the $171 million in new subsidies approved by lawmakers in the state budget. If political leaders stop wasting money on these programs, they can go a long way to addressing other fiscal issues, whether it’s letting taxpayers keep more of their own money or rebuilding roads.
Getting rid of the giveaways that are ineffective and unfair to residents and businesses alike would go a long way to making us a state where people are put ahead of the business of awarding favors.
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Lansing Politicians Put Favored Businesses Ahead of Everyone Else
Another $1.2B in favors approved this year
State lawmakers passed two programs this year to give the businesses they select taxpayer dollars. It’s the kind of policy that tells regular people that they don’t matter while the important people get to play by their own rules.
Our laws are supposed to set the guidelines for everyone to follow. These programs, by contrast, give the favored few an advantage. This is disrespectful to the people that have to pay for those favors.
Some policymakers think the state needs to award business subsidies because other states offer subsidies. They are under the mistaken assumption that these programs work. The favors they bestow cost real money and have economic effects as well. At best, such programs don’t create jobs; they transfer them and hurt everyone else in the process.
It’s not just the expense that matters. Favoring one business with taxpayer dollars means that they get advantages over other businesses competing in the same market.
To Lansing politicians, these new favors are small. The selected business owners get to keep some or all of the income and sales taxes generated at their businesses and developments. And, the politicians argue, this is costless to taxpayers because these expansions wouldn’t happen without taxpayer dollars in the first place.
But that kind of thinking breaks down when the idea is applied universally. Offering everyone else the same deal would bankrupt the state. When everyone lives or works in a place in which the builder gets income and sales tax revenue, the income or sales tax revenue is only collected by developers.
This transfer from everyone to a favored few ought to frustrate more than just budget analysts. The teachers being asked for salary concessions and the firefighters having their shifts limited should be as mad about this as any taxpayer who must pay for these programs.
These giveaways rob local governments of tax revenue. And while local governments face other fiscal issues, the problems posed by these new laws shouldn’t be written off, either. The two new programs approved this year give away another $1.2 billion in addition to the $7.6 billion in already-approved business subsidies. And that is in addition to the $171 million in new subsidies approved by lawmakers in the state budget. If political leaders stop wasting money on these programs, they can go a long way to addressing other fiscal issues, whether it’s letting taxpayers keep more of their own money or rebuilding roads.
Getting rid of the giveaways that are ineffective and unfair to residents and businesses alike would go a long way to making us a state where people are put ahead of the business of awarding favors.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
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