Taxpayers still owe billions for corporate tax credits

A small number of companies that still collect on tax credits from the Michigan Economic Growth Authority are expected to receive $533.1 million more from the state than they owe in taxes this year, according to a Senate Fiscal Agency report issued in December. But the amount each company receives is being kept secret from taxpayers.

MEGA, created in 1995 but largely closed in 2011, offered financial incentives to companies in the name of economic development. They could receive tax credits based on the wages they pay workers at a facility covered by an agreement between themselves and the state. Although the state has stopped awarding new credits, Michigan is still paying out on deals that last up to 20 years.

Companies with MEGA deals file tax returns under the Michigan Business Tax, which lawmakers repealed and replaced with the corporate income tax in 2011. Eligible companies may still file under the old tax and receive any credits for which they are entitled.

A handful of companies will receive additional MEGA credits, according to an Oct. 31 Michigan Strategic Fund report and a March 19, 2025, House oversight hearing. They are, as identified in the hearing (24:06 mark): Dow Inc., Farmers Group Inc., Ford Motor Co., General Motors Co., Gentex Corp., Graphic Packaging International, Hemlock Semiconductor Operations, Hyundai-Kia America Technical Center, LG Energy Solution Michigan, PureFlex Inc., Stellantis N.V. and Xalt Energy LLC.

Automakers receive some of Michigan’s most lucrative tax advantages despite representing only a sliver of the state’s workforce, according to James Hohman, fiscal policy director at the Mackinac Center for Public Policy.

“Taxes should raise money to operate the government,” said Hohman. “They shouldn’t be used to transfer hundreds of millions of other people’s money to some of the state’s largest private sector companies.”

Stellantis will lose its eligibility two fiscal years from now, Hohman said, saving taxpayers more than $150 million. The company had a deal for 18 years rather than the 20 years secured by Ford and General Motors.

Ford’s deal was intended to retain 41,200 workers, Hohman said. The numbers for General Motors and Stellantis were 34,750 and 27,000, respectively.

The Mackinac Center for Public Policy argued before the Michigan Supreme Court in 2021 that the state’s refusal to disclose how much it pays each recipient is unconstitutional.

“‘Tax credit’ is a subterfuge,” Patrick Wright, an attorney with the Mackinac Center, told Michigan Capitol Confidential in an email. “These credits are really cash payments to politically favored corporations and must be disclosed under Michigan Constitution’s Article 9 section 23 and also FOIA.”