MEDC Subsidies Questioned

Another Michigan Economic Development Corp. tax subsidy has come under fire.

North American Bancard, based in Troy, was granted a $21.5 million subsidy and says it will create close to 1,900 jobs, according to Capital News Service. So far, the firm says it has created 50 jobs. Michael LaFaive, director of the Mackinac Center's Morey Fiscal Policy Initiative, tells CNS that such pronouncements are primarily a public relations tool for politicians "to create the illusion that they are doing something to create jobs."

LaFaive and James Hohman, fiscal policy analyst, recently co-authored "The Michigan Economic Development Corporation: A Review and Analysis," which examines MEDC grants and shows that the program may actually be responsible for job losses, rather than gains.

For example, the study found that every $1 million in manufacturing tax credits received in a particular county was associated with the loss of 95 manufacturing jobs in that county. Overall, only about one-third of the jobs promised by state subsidies ever come to fruition.

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