House Tax Policy Committee Debates Tax Credits In

Spirited debate took place this week as some members feared Michigan would not be on a level playing field with other states if the Legislature took action to end certain tax incentives.

Committee members supportive of the Michigan Economic Growth Authority (MEGA) are concerned that House Bills 4333 and 4334 would prohibit any new MEGA agreements and other states would be able to take potential business investment away from Michigan.

Members of the House Tax Policy Committee on the other side of the debate suggest these bills are not ending all incentive to businesses thinking of relocating to Michigan, just the MEGA credits. There are other incentives the State can use to create a business friendly environment and persuade companies to make Michigan home.

House Bills 4333 and 4334, introduced last month by Representatives Lee Chatfield (R-Levering) and Gary Glenn (R-Midland), would prohibit MEGA tax credit extensions as currently allowed in the Michigan Economic Growth Authority Act.

Since the MEGA credits were greatly expanded in 2008, the program has accumulated a projected taxpayer liability of $9.38 billion. The Legislature and Governor ended MEGA in 2011, but even with the program’s demise, state law still allows the existing credits to be increased and extended. This bill package would prevent this from happening in the future.

Under this legislation, credits that have already been awarded will not be touched; however, future administrations and legislatures will no longer be able to make amendments to the credits in a way that would extend these tax credits and create financial liabilities to future generations of Michigan taxpayers.

The $9.38 billion estimated liability is projected to be incurred over the next 17 years. For the coming fiscal year, the credits created a $325 million state budget shortfall that legislators are currently working to solve.

Based on the debate in the House Tax Policy Committee meeting this week the committee did not take action on the bills and Representative Farrington (R-Utica), Chairman of the committee suggested they would not take the bills up again for several weeks as they continue to work out their differences.

posted by PAA Online , Friday, April 17, 2015 12:08 PM
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