LANSING — Controversial economic development legislation passed the Michigan House on Wednesday afternoon, setting the stage for Gov. Rick Snyder’s likely signature.
The so-called “Good Jobs” legislation allows large employers creating hundreds or thousands of jobs to keep some or all of the personal income tax generated by the new jobs, as MiBiz previously reported.
All three bills passed the House by a margin of 71-35.
For his part, Snyder heralded the bills’ passage, saying that it will better position Michigan to compete.
“Michigan has made a tremendous economic comeback in the past six years, and passage of this legislation sends the signal that we are pressing forward to ensure the strongest possible future,” Snyder said in a statement. “Where before we were complacent and our economy centered around the Michigan Business Tax and a broken tax code, including an overabundance of tax credits, we are now enacting forward-thinking policies that make us more competitive for new jobs and industries in a fiscally responsible fashion.”
The legislation had support from a number of business organizations, including the Grand Rapids Area Chamber of Commerce, Business Leaders for Michigan, The Right Place Inc. and Southwest Michigan First.
“With this action, Michigan is now one step closer to being able to go toe-to-toe with our neighbors in surrounding states in growing more and better jobs for Michiganders and our communities,” Patrick “Shorty” Gleason, legislative director for the Michigan Building & Construction Trades Council, said in a statement. “These are the kinds of jobs and opportunities that will provide lasting benefits for our state’s hard-working men and women and their families.”
The legislation would allow for no more than 15 business expansion or attraction projects annually to capture up to half of the personal income tax generated by the new jobs. The legislation is capped at $250 million annually, and companies must create a minimum of 500 new jobs and pay 100 percent or more of the average regional wage, as MiBiz previously reported.
Despite broad support from the state’s business sector, the “Good Jobs” legislation also had its detractors. Midland-based Mackinac Center for Public Policy, a free market think tank, characterized the legislation as a repeat of the defunct Michigan Economic Growth Authority (MEGA) from the late 1990s and 2000s.
Likewise, the Michigan chapter of the National Federation of Independent Businesses (NFIB) expressed “disappointment” with the legislation’s likely passage, saying that the state instead should focus on improving the climate for all businesses.
“Michigan small business owners have seen enough of ‘good jobs’ promises through targeted tax incentives to know they don’t work,” NFIB State Director Charlie Owens said in a statement. “It is disappointing to see the governor and legislature drift back toward these quick fix economic development programs while broad based overall tax reform has been proven to be the better approach.”
However, the bills’ backers said the legislation would put Michigan in the hunt for large-scale projects, the likes of which include Foxconn Technology Group, a Taiwan-based electronics manufacturer that reportedly was considering a metro Detroit site for a multi-billion dollar U.S. expansion.
Right Place President and CEO Birgit Klohs previously said that passage of the legislation would pay dividends for the whole state, as companies and site selectors looking to make large investments will now consider Michigan as a viable option.
“This is like having Right to Work done,” Klohs said for a previous report. “Once we got that done, we ended up on lists we were never on before. This would put us on a different spectrum for possibilities for at least getting a chance to make our case. That doesn’t mean we’ll get it, but if we don’t get the chance to make the case, we know we will never get it.”
Editor’s note: This story has been updated to include comments from Gov. Rick Snyder.