Do corporate tax incentives boost Michigan's economy?

Jul 30, 2014

David Bieri is assistant professor of urban and regional planning at the University of Michigan, Ann Arbor. His main research and teaching interests are at the intersection of urban planning and real estate economics, public finance and economic geography.

Last week, General Motors announced plans to expand its Delta Township plant and requested a 50% tax break over 12 years from the Lansing City Council. Similarly, the new logistics center at General Motor’s Grand River plant that just started construction that comes with a $4-million tax break.

It turns out that Michigan is one of the nation’s leaders in offering incentives to retain companies and attract new ones. At the end of 2012, the New York Times published a database that tracked business incentives awarded by hundreds of municipalities across the country. Besides Texas, no state spends more than Michigan, to the tune of at least $6.6-billion annually.

Recent studies have emerged that call into question just how effective these incentive programs are at creating new jobs and attracting economic growth. Current State talks with David Bieri, an Assistant Professor of Urban and Regional Planning at the University of Michigan. His research has looked at economic incentive programs in the state. He says that all of this tax incentive activity in Michigan is because of its manufacturing heritage.