Compete to Win: Michigan's Path to Top 10 — Business Leaders for Michigan

Summary

Slides from Business Leaders for Michigan headed Compete to Win: Michigan's Path to Top 10, a framework for holistic economic development, under the principle of taking a smart, consistent approach to incentives. One slide states that Michigan is one of only 13 states without a research and development tax incentive and outlines a Michigan Research and Development (R&D) Tax Credit program under which businesses with 250+ employees can claim up to $2.0 million a year. Another states that Michigan is one of only 8 states without a job creation tax incentive and outlines the High-Wage Incentive for Regional Employment (HIRE) program (Senate Bills 579-581), with awards capped at no more than $200 million in a given year. Both cite a statewide survey of likely 2024 General Election voters by The Glengariff Group, Inc.

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Compete to Win: Michigan’s Path to Top 10
A framework for holistic economic development

Key Principles

1) Prepare now for the future we want

2] Ensure Michigan's talent is a differentiator

@} Make Michigan the easiest state for people and
businesses to grow

4] TAKE A SMART, CONSISTENT APPROACH TO
INCENTIVES

Michigan is one of
only 13 states
without a research
and development tax
incentive

Source: Weldon Cooper Center Analysis based on Wolters Kluwer VitalLaw,
Haaly Schadewald, and Nelson (2021), Pennsylvania Independent Fiscal
2 Office (2020), and Schmidt (2021)

Question: Do you support Michigan using more, the same, or less incentives as Ohio and Indiana to attract jobs and

investment?

More incentives to attract jobs
Same incentives to attract jobs
Less incentives to attract jobs Jj¢«
Don’t Know! Refused...DO NOT OFFER 194

ME

Michigan voters
-EluRvA strongly support

‘ competing with
neighboring states on
incentives

Source The Glengariff Group, Inc. statewide survey of likely 2024 General Election voters, 600 sample, live operator telephone survey,
September 6-11, 2023, +/-4.0% MOE, 95% level of confidence

Michigan Research and Development (R&D) Tax Credit program (House Bills 5099-5012)

SMART PREDICTABLE PRO-GROWTH

*Modeled on federal credit.

o Businesses with 250+
employees can claim up to
$2.0 million/year,;

o Businesses under 250
employees can claim up to
$250 000/year:

research university is
eligible for an additional
$200,000 credit

‘Defends and diversifies
Michigan’s economic
base. Drawing future
automobile manufacturing
and other knowledge
economy industries.

* Total awards capped. No
more than $100 mitlion ina
given year.

* Easy to use. Business files
for state credit at same time it
files for federal credit.

*Must make required
investment to qualify. If the

investment isn’t made, no
incentive is awarded.

«Has transparency and
accountability. Regular
public reporting and
evaluations of the program’s
effectiveness required.

*Spurs entrepreneurial

activity. States that
introduced R&D tax credits
saw 20% growth in new
business formation over 10

years.

(Fazio, C., Guzman, J., & Stem, $
(2020). The impact of State-Level
Research and Development Tax
Cradits on the Quantity and Quality of
Entrepreneurship. Economic
Development Quarterly, 34(2), 788-
208)

iff BUSINESS LEADERS FOR
MICHIGAN
Compete to Win: Michigan's Path to Top 10
A framework for holistic economic development

Key Principles

4] Prepare now for the future we want

@ Ensure Michigan's talent is a differentiator

Make Michigan the easiest state for people and
businesses to grow

© TAKE A SMART, CONSISTENT APPROACH TO
INCENTIVES

Michiganiis one of
only 8 states
without a job
creation tax
incentive

iob-creation-capta! investments, March 22, 2022

a

Question: Do you support Michigan using more, the same, or less incentives as Ohio and indiana to atiract jobs and

investment ore incentives to attract jobs 457 | ; Michigan voters
Same incentives to attract jobs me Uxe) strongly support
Less incentives to attract jobs fjj¢¢ competing with
neighboring states on
Don't Know! Refused...DO NOT OFFER 134 incentives

Source. The Glenganfi Group, Inc. statewide survey of likely 2024 General Election voters, 600 sample, live operator telephone survey,
September 6-11, 2023, +/-4.0% MOE, 95% level of confidence

High-Wage Incentive for Regional Employment (HIRE) program (Senate Bills 579-581)

jobs. Businesses can

capture personal income

tax withholding from new

jobs they create if they

add:

© 250+ new jobs at 125%
of the regional median
wage; or

o 25+ new jobs at 150% of
the regional median
wage

*Does not favor only large
projects or certain
industries. Only casinos,
retail and professional
sports are ineligible.

* Total value of awards is
capped. No more than
$200 million in a given year

*It’s fiscally responsible.
The jobs would not have
been here without the
incentive, so it does not cut
the general fund.

«it’s net positive long-
term. The state forgoes
some personal income tax
in the short-term, but it, as
well as sales tax and
property taxes, accrue to
the state over the long-
term.

*Must create jobs at
required wages to
qualify. If the jobs aren't
created, no incentive is
awarded.

*Has transparency and
accountability. Required
regular public reporting and
evaluations of the
program's effectiveness.

*Maintains local
control. Local government
support required.

ff BUSINESS LEADERS FOR
MICHIGAN


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