Editorial: Deal to cap GM should be public
General Motors Co. will invest $1 billion in Michigan by 2030, part of a new deal the company reached with the state to reconfigure and cap the automakers’ tax credits under a program that gives companies credits for keeping jobs and other investments in the state.
It’s a welcome investment in Michigan’s economy. But the company should also disclose the amount at which its Michigan Economic Development Corp.’s (MEDC) MEGA credits are capped, along with details that might help the Legislature better plan for future budgets on an annual basis.
Based on rough estimates and limited information available, that number could be as much as $4 billion or $5 billion over the next 15 years.
The company said the information is “proprietary and competitively sensitive,” and it only agreed to the new deal after promises from the MEDC and the governor not to disclose the information.
But Ford Motor Co. and FCA US (formerly Chrysler LLC), which reached similar deals, have voluntarily released their numbers.
The amount of GM’s tax credit is vital information for the Legislature, and relevant to taxpayers. The new values of the credits are not available to the public or through public records requests. The MEDC and the Treasury Department use the state tax law and Strategic Fund Act that shields tax return information for any taxpayer to protect the information.
The MEGA credit’s estimated overall liability has increased to $9.38 billion from $6.5 billion as of this coming February.
Ford has agreed to a $2.3 billion cap, and Chrysler has accepted a $1.7 billion cap. They also promised new investments as a result of their deals with the state.
That adds up to $4 billion of the little more than $9 billion in tax credits for the “transportation” industry — 96 percent of the state’s total liability through 2031.
In July 2014, the MEDC valued GM’s long-term tax credits at $2.1 billion. That number has almost certainly increased with rising pay and bonuses of the almost 33,000 GM employees in Michigan covered by the credits.
These kinds of programs, mostly crafted under previous administrations, have been critical for Michigan’s economic rebound over the past decade.
But because they deal explicitly with tax revenue, it’s regretful that the public and the Legislature are not privy to details of the deals. The information should be publicly available. Further, GM shouldn’t be asking the governor to make a deal with one company with more protective terms than similar deals with a other companies.
The MEDC will have to give the Legislature at least a ballpark figure for all MEGA credits, which are wiping out any tax revenue the state receives under the old Michigan Business Tax. That has been replaced with a flat 6 percent corporate income tax.
But the Legislature in particular needs better guidance on how much of those credits the automakers might cash in on annually, and what they need to plan for. The company’s continued investment in Michigan is appreciated, but it should be required to disclose information that is rightly public.