News Story

Other States Divulge What Michigan's Corporate Welfare Arm Keeps Secret

The Michigan Economic Development Corporation — the state's corporate welfare arm — won’t disclose the companies to which it hands out public money. In other states, this type of information is routinely made available, which strongly suggests the barriers to doing so in Michigan are strictly homegrown.

“Bottom line is that there is absolutely no reason — business climate or privacy — to not disclose corporate income tax credits, and the trend among states is absolutely toward more disclosure of them,” said Greg LeRoy, the executive director of Washington, D.C.-based Good Jobs First, a group that monitors businesses. “States are more and more willing to disclose tax credits because they understand that such transparency is not disclosing corporate tax returns or tax liabilities”.

“Reporting tax credits is just good government and no different than disclosing property tax breaks, private activity bonds or training grants that have always been public information,” LeRoy added.

Among the states that consistently provide this level of transparency, Massachusetts and Missouri head the list. Other examples can be found on the Good Jobs First Subsidy Tracker.

In 2009, after years of disclosing the names of companies receiving taxpayer money and other special treatment, the MEDC stopped doing so. Six years later, some of the circumstances were finally unearthed. Sometime around 2009, the agency — apparently unofficially — asked someone in the attorney general's office if the information should be disclosed. It was verbally and informally advised to stop the practice.

Questions raised by the Mackinac Center for Public Policy caused the issue to arise briefly during a Feb. 18 hearing of the House Tax Policy Committee. This was the same hearing at which it was revealed that the state was on the hook for $9.38 billion in liabilities from deals the MEDC had made with companies to extend tax breaks and subsidies. In his testimony, Department of Treasury chief economist Jay Wortley told the committee that the tax credits couldn’t be publicly disclosed because doing so would violate the State Revenue Act, which prohibits state officials from revealing details of individuals’ tax return information.

What wasn’t explained was — if the State Revenue Act is the obstacle to full disclosure — why was the information released before 2009? And after 2009, why did the Michigan Film Office continue to release the names of the entities it gave money to through the state’s film credit program?

State officials have implied that their hands are tied when it comes to disclosing the particulars of subsidies. But the same kind of information is routinely disclosed in other states. If convincing evidence were in fact offered that current law prohibits such transparency, nothing prohibits Gov. Rick Snyder and a simple majority of the House and Senate from amending the law to permit or require disclosure.

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.