Are Tax Breaks for Big Businesses Worth the Jobs They’re Supposed to Create?

“Politicians simply uncritically, naively accept the word of these big companies.”

Michigan State Capitol building on a sunny day

Jake Neher/WDET

State lawmakers are sending $200 million in new tax incentives to Gov. Rick Snyder’s desk.

Those incentives are meant to lure thousands of jobs to Michigan from several companies including Taiwanese manufacturing giant Foxconn. That’s the controversial company that assembles Apple IPhones in China. Foxconn says it intends to open new manufacturing facilities in the U.S.

Here in Detroit, taxpayers have given hundreds of millions of dollars to billionaire sports team owners building and moving to new arenas and stadiums downtown. The latest round of those breaks comes in the form of $34.5 million  to subsidize the Pistons’ move to Little Caesars Arena.

Are these moves good public policy? Do they create jobs and generate revenue that wouldn’t otherwise exist?

Shikha Dalmia, senior analyst with the Reason Foundation and writer for Reason Magazine joins Detroit Today to discuss tax subsidies. Dalmia says she thinks tax incentive programs have been a failure in the state. She says Gov. Rick Snyder’s support for the latest round of tax subsidies moves the state in the wrong direction.  

“Rick Snyder is undoing his legacy,” says Dalmia, who says this is an about-face for a governor who campaigned on ending these kinds of incentive packages.

“The problem with these projects is that politicians simply uncritically, naively accept the word of these big companies about the jobs they’re going to develop, [and] we really have no idea.”

Dalmia says the film industry tax-credit program is a clear example of many years and dollars wasted on a failed program.

To hear more from Dalmia on Detroit Today, click on the audio player above.


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