News Story

Dems' Plan: Scale Back Select Corporate Tax Credits They Already Voted For

Do the same people who overwhelmingly supported these credits have the political will to go back and cut them?

A new proposal announced by state Senate Democrats would use savings generated by eliminating “ineffective tax loopholes” to pay for the college tuition of Michigan students. However, these same “ineffective tax loopholes” for particular businesses include ones that the Michigan Senate Democrats have overwhelmingly voted for over the past several years.

Robert McCann, spokesman for Sen. Gretchen Whitmer, D-East Lansing, said the plan was to shave off just 5 percent of the $35 billion in tax credits the state gives out.

McCann said under the plan any new tax credit would be limited to four years and there would also be a review done by an “independent review panel” to see if the tax credits were effective and producing jobs.

At about $9,575 per student, the program would cost an estimated $1.8 billion per year.

However, many of the tax credits that would have to be slashed were supported by the Senate Democratic caucus.

For example, during Sen. Whitmer’s tenure in the state Senate and House there have been 556 roll-call votes listed in the “economic development” category, which includes most programs involving special tax breaks and subsidies for particular developers, companies or industries.

“Scanning that list, it’s hard to find a single ‘no’ vote by Sen. Whitmer on a substantive bill involving corporate welfare programs,” said Jack McHugh, senior legislative policy analyst at the Mackinac Center for Public Policy.

For example, Democrats voted unanimously in the Senate to support the state's film subsidy program.

Whitmer also voted ‘no’ on Senate Bill 773 in 2009, an effort by then Sen. Nancy Cassis, R-Novi, to cap the state’s MEGA program, then considered the "flagship" among the corporate welfare programs the Democrats’ 20/20 plan is now looking to cut.

Do those who overwhelmingly supported these tax credits now have the political will to go back and cut them?

“That remains to be seen,” McCann said.

The Senate Democrats' plan starts out by saying, “Over the past decade, governmental belt-tightening has come only via state employees, who have given back over $500 million in concessions.” According to the Michigan Department of Civil Service, the state spent $3.9 billion on employee pay and benefits in 2001 and $4.7 billion in 2008. That’s an $800 million increase despite there being an 18 percent drop in the state work force over the same period.

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.