MI Chamber Shares Opposition to Research and Development Tax Credit Bills as Written

Summary

In this memorandum dated October 17, 2023, Leah Robinson of the Michigan Chamber of Commerce states the Chamber's opposition to House Bills 5099-5102 as introduced, which would create a Research and Development (R&D) tax credit. The memo asks sponsors to consider both new and existing businesses for eligibility, including those that pay the Corporate Income Tax (CIT) and the Michigan Business Tax (MBT). It objects that the bill gives the Michigan Strategic Fund (MSF) unfettered authority to decide who receives a credit and urges that Treasury administer a broad-based credit. It calls the $100 million annual cap and the $2 million cap per filer for large businesses too low.

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G

MICHIGAN
CHAMBER
of Commerce
MEMORANDUM
TO: Honorable Members of the Michigan House Committee on Economic Development and Small
Business
FROM: Leah Robinson, Michigan Chamber of Commerce

SUBJECT: MI Chamber Shares Opposition to Research and Development Tax Credit Bills as Written
DATE: October 17, 2023

This memo is to voice the Michigan Chamber’s opposition to House Bills 5099-5102 as introduced, which would
create a Research and Development (R&D) tax credit. Although we generally agree and appreciate the sponsors
emphasizing that R&D tax credits are a beneficial economic development tool, we believe it should be structured to
benefit companies both attracting and retaining jobs in critical industries innovating in Michigan. Michigan’s goal
for an R&D tax credit should be to improve Michigan’s business and economic climate for companies of all sizes
and offer fair, simple, and impactful incentives.

We understand that amendments are being discussed and would encourage you to consider the following goals
when formulating changes:

¢ Fairness. To urge fairness for businesses that have already been investing in Michigan’s R&D space, we'd
urge sponsors consider both new and existing businesses for eligibility, those that pay the Corporate
Income Tax (CIT) and the Michigan Business Tax (MBT).

« Simplicity and reliability. As written. the bill gives the Michigan Strategic Fund (MSF) unfettered
authority to make subjective decisions about who receives a tax credit. Instead. look to the Michigan
Departinent of Treasury to administer this program for two reasons:

Allowing Treasury to administer a broad-based credit. rather than an application-based credit.
provides annual reliability and predictability for businesses seeking this relief.

A broad-based credit removes the immense hurdle eligible businesses would have to face to only
apply for a credit. A simple broad-based credit ensures the incentive is as encouraging and
desirable as possible.

® Impactful. The $100 million annual cap. the $2 million cap per filer for large businesses and the $250.000
cap per filer for small businesses is too low and would not incentivize large, meaningful capital
investments. Raising the aforementioned caps would allow for more impact.

An R&D tax credit, if structured appropriately, can add significant value to current and future Michigan businesses
in industries and sectors leading the way for technological growth and development. We look forward to working
with you to craft legislation that accomplishes the goals outlined above.

If you have any questions, please do not hesitate to contact me at (865) 235-9616 (cell) or


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