Senate tax incentive plan faces House uncertainty

Michael Gerstein, and Jonathan Oosting

Lansing — The Senate approved a plan Wednesday to offer more tax incentives to large businesses to expand or relocate in Michigan, but it now faces an uncertain fate in the state House.

Gov. Rick Snyder and Senate Majority Leader Arlan Meekhof support the legislation. House Speaker Tom Leonard, R-Dewitt, has given a priority to approving income tax cuts this year and has not committed to a stance on business and development incentives.

The revised legislation, introduced earlier this month after stalling late last year, would allow up to 15 businesses to capture annually a portion of income taxes paid by new hires if they successfully create hundreds of jobs in Michigan.

It’s a plan aimed at creating “good” jobs, supporters say. The jobs would have to pay at least the national average regional wage, which is between $18.57 and $27.77 per hour in parts of the state.

Backers say it would help spur economic growth and create jobs in an economy where states offer competing incentives to companies that compete globally with firms manufacturing products for far less in countries with weaker labor protections.

Some companies could keep up to half of the personal income tax withheld from new employees for five years if they create at least 500 jobs paying at least the average regional wage and all of new employee income taxes for 10 years if the company creates at least 250 jobs paying at least 25 percent more than the average regional wage.

The Michigan Strategic Fund could approve up to 15 projects a year for a value that can’t top $250 million at any one time. Companies that don’t make jobs under the requirements outlined in the legislation wouldn’t receive any tax incentives.

Sen. Patrick Colbeck, R-Canton, who opposes the legislation, called it a “completely misdirected” tax incentive that would benefit only a handful of large companies.

“This is a case where we need to start pursuing broad-based tax incentives that benefit everybody, not these targeted incentives that benefit 15 some-odd companies,” he said.