“I don’t think we should be giving nine-figure incentive checks from state government” is how Michigan Republican representative Jamie Thompson describes a 61 to 47 Michigan House of Representatives vote to remove refundable tax credits from the Detroit Three automakers, including GM, Stellantis and Ford.
The push to remove tax incentives for GM and the other major automakers to remain in Michigan appears to somewhat contradict GOP U.S. President Donald Trump‘s efforts to strengthen America’s domestic auto industry as well, per The Detroit News.
The effects of removing the tax incentive from GM and the other Detroit Three automakers is unlikely to be trivial. First launched in 2009 when the U.S. auto industry was on the point of collapse, the tax breaks were scheduled to remain in place for 20 years, until 2030. However, state Republicans appear determined to end the breaks early.
Taxes on auto sector operations in Michigan will skyrocket to a whopping 30 percent, the state’s overall business tax rate, from the special 4.95 percent tax rate the Detroit Three are currently enjoying. This move will put about $500 million in taxpayer refunds on the chopping block as the state scrambles to backfill a $3.9 billion road infrastructure funding deficit without slapping additional taxes or fees on motorists.
GM Lansing Grand River Plant in Michigan
The Michigan Economic Growth Authority (MEGA) tax credits allow the automakers to get tax credits for the state income taxes paid by their employees, with GM among those collecting these tax benefits. The tax credits were lowered somewhat in exchange for waiving a minimum employee requirement at the Renaissance Center HQ just before COVID-19. In the face of the increased business tax, the companies will probably drop the program altogether and instead opt for the flat 6 percent state income tax most corporations pay in Michigan, with no deductions or credits allowed.
Michigan Manufacturers Association vice president Mike Johnston says the change amounts to “a 506 percent increase, clearly targeted to wipe out the value of the MEGA credits.” Representing GM and other Michigan corporations, Johnston says the Big Three might decamp for greener tax pastures in other states, pointing out that “it’s very hard to make investment decisions (in Michigan) when the cost of doing business is dramatically increasing.”
Governor Gretchen Whitmer, a Democrat, said she thinks “it would be a mistake to upend” the MEGA tax credit, but signaled that she might be willing to support alternatives, stating “that being said, I think there’s probably always ways that we can make sure that our policies are smarter and achieve the goals.”
Michigan Governor Gretchen Whitmer
House Republicans, meanwhile, cite record profits and profit-sharing as signs GM and other automakers don’t need the tax credits any more. House Speaker Mark Hall downplayed the change’s impact, saying “it’s going to be more fair and the same type of tax rate that every other corporation in Michigan pays.”
Comments
The “bait and switch by gm” (quote used by Michigan legislators on both sides of the aisle) regarding the nearly $700m in state incentives for the Lansing battery plant fiasco is what’s behind this action. Then their request for public funds for the Ren Cen was the icing on the cake. They’ve seriously po’d a lot of state government representatives in both parties.
The Lansing battery plant still exists; GM just sold its stake in it. Maybe if we didn’t have an anti-EV president who wants to make enemies of every democratic country, then GM’s EV growth could continue.
Geez, flewy, now you’re somehow defending corporate welfare while they make record profits. This has been a “defending Mary” talking point from you and your gm-can-do-no-wrong army of psychphants.
And because of your severe TDS, you’re now defending a war, government largess, government waste, and agenda-driven taxation.
I thought you libbies were against al of this stuff just a few short years ago. You remember, I’m quite sure.
Close down the money hose. We give them American tax breaks and they move production out of the USA. I’m only buying used from now on!
This is for the best. Maybe GM can expand to more business, tax, regulatory, non union friendly states and be more cost competitive. I am not mad at the D3 for taking advantage of what was being offered to them. This will benefit the company and tax payers. They are taking in record profits and the gov needs to stop demanding what mix of vehicles they make. This is why everything cost over 50k these days
Glad to see government grifting is finally having some sunshine and disinfectant applied. So much waste and abuse across all levels of government. This is just one example. End corporate welfare!
Michigan may regret this. In the future any business looking to open or expand in the state via tax incentives will remember this action, and it may cause business to expand elsewhere, or never consider Michigan in the first place.
True, but on the other hand, who wants to live in Detroit? Most automakers are venturing south and one benefit of that is a much more desirable place to live and work.
Lol this idiot boomer 😂
I generally hate republicans but they are right on this one.
Orrr… Abolish the income tax altogether. Florida does it, Tennessee does it, Texas does it, and all three have better services than the rest of the country. Income tax only punishes the industrious. Consumption tax. It levels the playing field to take a bigger bite out of the freeloaders and wealthy over spenders.
Orrr… we could be like the UAE and have no income tax, no property tax, and a low sales/VAT tax. With all the money we give away, we could not and reduce the liability for everyone. Not just Mary and her $27 mil a year comp.
Exactly. Income and property taxes are BS and unfair. I know around here, big corps get off the hook for taxes for about 20 years. Housing and apartment developers don’t pay property taxes for 20 years either. Then you have a bunch of apartment complexes pop up, thousands of renters move in and use the schools, roads, and other services, and don’t pay anything. The cost gets pushed onto homeowners.
Tariffs and anything that ends up as essentially a sales tax is more fair. You know exactly how much you owe at the time of purchase, so no complex formulas or having someone do your income taxes. Also, zero loopholes. Everyone pays when they buy something, including corps and rich folks, who will naturally pay more since they buy more.
Check out Property taxes in all the states you mentioned. They get you one way or another.
Yes, but they get you much much less (unless you in deep blue Austin which has outrageous lefty property tax on top of state property taxes) but with consumption taxes, it’s at least FAIR! Everyone pays the same amount. No carve outs for special interest groups, no freeloaders. Personally, taxation is theft, but until we return to Calvin coolages paradise, we have to start somewhere.
Sorry, incentives are what Michigan has to offer to lure business as does other cold weather rust belt states. The last governor unilaterally disarmed incentives and pushed right to work and there was NO economic development his first 7 years in office. It was only on his last year he realized business incentives are needed to compete. That being said, a deal is a deal and the state needs to uphold its end of the bargain. In 1999 Michigan was #16 in per capital income. Today it is 39th. With the poor weather and relatively high unemployment, Michigan needs all the help it can get.
High unemployment means lots of job seakers. Normally good for buisness. Michigans problem is they take over every buisness that ends up there. IDK if I’d call Michigan weather poor either. Their summers are from heaven above.
There’s no better place to spend a summer than michigan- agreed. But there are few worse places to spend a winter. Summer’s only five months here if we’re lucky.