The Granholm Administration wasted no time after the Michigan Economic Growth Authority monthly rubber-stamp board meeting on Tuesday to start pumping out press releases bragging that more than 2,800 new jobs were coming to Michigan as a result of selective tax break deals for the latest gaggle of "winner" firms and projects.
The MEGA-related jobs claims should be discounted by 71 percent, based on the results of a study released August 31 by the Mackinac Center. The authors found that only 29 percent of the direct jobs promised by MEGA deals inked between 1995 and 2004 actually happened.
Even this figure must be discounted, because the Michigan Economic Development Corp., of which MEGA is one arm, can't prove that any of these jobs wouldn't have been created without the discriminatory tax breaks and related subsidies
Moreover, two separate statistical analysis of MEGA's net economic impact on counties and the state showed that at best, the program had no positive impact on job creation.
Specifically, a 2005 study found that between 1995 and 2002, MEGA failed to improve per-capita personal income, employment or the unemployment rate in the state or in counties with MEGA companies. For every $123,000 in tax credits offered, just one construction job was created, and 100 percent of those jobs disappeared within two years.
The 2009 study examined the dollar value of tax credits actually earned by manufacturing-related MEGA deal recipients — ones where a job was actually created and a tax credit delivered — and their overall employment impact, and it discovered that the relationship was negative: For every $1 million in tax credits won, manufacturing employment declined by 95 jobs in the county where the MEGA company's facility was located.
The MEDC has not refuted either study. Yet it continues to hand out MEGA deals like candy on Halloween. Lawmakers should once and for all call the whole thing off, and finally get down to the serious business of reforming Michigan's tax, spending, labor and regulatory climates — that would be a real economic development program.
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