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Michigan: poster child for economic development incentives!

May 19, 2009

Michigan may be the most aggressive user of the Iowa strategy of high tax rates with lots of "targeted" tax subsidies to favored industries. So how's that going?

Michigan's major economic development tool has produced only about 24,000 new jobs over its 14-year life, a Free Press examination has found.
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State officials also say the program -- tax incentives granted for jobs that are created or saved -- has retained more than 43,000 positions.

The state, however, has shed more than 700,000 jobs since the decade began. In March of this year alone, 25,000 people in Michigan joined the unemployment rolls.

Of course Michigan's problems go much deeper than the tax structure, but at best the "targeted" approach is spitting into the wind. By making it harder for the non-favored businesses to survive and compete, the state's high rates probably chase away far more jobs than the corporate welfare attracts. When you lose 700,000 jobs, attracting 25,000 others isn't that impressive.

Via Tax Rascal's Twitter feed