What if your state is hostile to your business?

Here in Michigan, we need to find something new to do. This economy is built upon manufacturing, which is rapidly fleeing for the lower cost regions of the world. It is a foundational and critical mistake to try to reverse this, as manufacturing will always seek the lowest costs … so unless you can provide them, you are going to lose this business eventually.

Which means you shouldn’t invest tax dollars … my dollars … in helping such businesses “grow” here, as it inordinately transfers such tax burdens onto … wait for it … me and my fellow tax payers and small businesses.

This article brought it home.

GalaxE Solutions was granted state tax breaks worth $4.6 million over five years. The city of Detroit is considering further property tax breaks for the company, which chose Detroit for its second U.S. on-shore facility.

and

Another metro Detroit project receiving tax breaks is Magna Holdings of America, Inc., which plans a $49.2-million expansion of its automotive manufacturing and engineering operations at new sites in Auburn Hills, Troy, Shelby and Lansing. Magna received tax breaks worth $5.6 million over seven years.

and of course, such tax breaks are available to all …

The MEGA board???s new vetting policy requires background checks for all businesses seeking state tax breaks. Background checks must be conducted on individuals who hold 20% or more stake in smaller companies that apply.

However civil and criminal background checks are not required for:

??? Individuals of companies with 20 or more employees.

??? Individuals at companies with at least five years of operations in Michigan.

??? Publicly traded companies, or wholly-owned subsidiaries of publicly traded firms.

… which I read as “if you are a smaller new company, investing in growing in Michigan, you need not apply.”

Why not “hire a person out of work, and get a state/federal tax abatement on their income” which lowers your cost to hire them as a worker …

I dunno … seems … kinda … obvious.

Considering what we paid last year in state and federal taxes, we could have hired a high wage high value employee, and paid them for an entire year, rather than give the money to the government. I have a great deal of faith that the employee that I could not afford to hire because of our tax bill (would have completely covered 1 year of salary mind you) would have done a better job of more thoughtfully spending the money than the federal and state governments would have.

Now imagine doing that, I dunno, en-masse? What would this do to un-employment, the real number is hovering around 17%, not the fake ~10% number we hear quoted, which specifically doesn’t count the frustrated and under-employed …

But the state wants to give tax breaks to companies that eventually leave the state (we had a nice fiasco here in the state with Pfizer’s decision to close its Ann Arbor facility after getting such a tax break …).

Nice to know we are appreciated so much.

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