Detroit Today: Are corporate subsidies good for Michigan’s economy?

What’s the best way to create jobs?

In Michigan and across the U.S., many Democrats and Republicans may have come to an agreement: Give corporations money to grow their capacity, innovate and hire more people.

At the national level, Democrats passed the Inflation Reduction Act and the CHIPS and Science Act — both of which use tax credits to get companies to invest more in developing green technology and manufacture microchips.

Corporate incentives are also a big plank of Gov. Gretchen Whitmer’s policy agenda and the Democratic majority in Lansing.

In 2021, Whitmer signed a bipartisan bill funneling $1 billion of state funds to attract large business projects. A year later the Michigan Legislature launched the Strategic Outreach and Attraction Reserve Fund, allocating $1 billion in spending, mostly to fund business incentives. This year, the Michigan Strategic Fund approved $1 billion to support Ford’s $3.5 billion investment to build a battery plant in Marshall, Mich.

Mackinac Center for Public Policy Director James Hohman and economist Erica York joined Detroit Today to discuss corporate subsidies in Michigan.

Listen: Are corporate subsidies good for Michigan’s economy?

Guests

James Hohman is the director of fiscal policy at the conservative Mackinac Center for Public Policy think tank, and the host of the Overton Window podcast. He recently wrote a column for Bridge Michigan saying corporate incentives don’t create jobs like they’re intended.

“They don’t do what they’re promised and there’s a better way to create jobs,” says Hohman.

Erica York is the senior economist and research manager of Tax Foundation’s Center for Federal Tax Policy. York says states would be better off analyzing structural elements of a tax system.

“Do we have a competitive tax code with respect to our neighboring states,” asks York.