OOPS! Lansing has been buzzing this week about the news that a convicted felon pulled the wool over the eyes of state officials and qualified for over $9 million in tax breaks in a less-than-forthcoming way. Relax, we’re told, no money changed hands, the taxpayers were not fleeced, and the guy is in custody with an over $9 million bond placed on his head. (Talk about the punishment fitting the crime!) In the wake of this scandal, the House approved an 11-bill package this week requiring background checks, accountability and transparency in the process of awarding tax credits. The main bill bars companies from receiving abatements if officers have been convicted of certain felonies in the past 15 years. Businesses incorporated in tax haven countries and those in violation of antitrust laws also would be barred from getting credits.
Targeted tax breaks given out to industries, companies, or individuals are part of the economic development game that the state uses to attract investment and allegedly create jobs. This is in direct contrast however, to what both liberal and conservative economists agree is the “fairest” way to tax, namely to have a low rate and a broad base. Instead, targeted tax cuts erode the tax base and drive up the tax burden for everyone else. I have been fighting, often unsuccessfully, to make the state stop doling out these favors especially considering the many important funding priorities that are being left behind. It is a tough battle but one I intend to keep up. Maybe the real crime was allowing the state to offer these corporate tax giveaways in the first place.