LANSING, MI — When the proposal of a payroll tax cut was mentioned during Gov. Gretchen Whitmer’s State of the State address on Jan. 24, Rep. Dylan Wegela cringed at the thought.
The Garden City Democrat told MLive Thursday he would not be voting for the program should it go up for a vote in the House, panning the effort as “Reagan-era tax policy.” And in a chamber where Democrats can’t afford to lose any votes on policies solely crafted by their party, it’s a question as to whether the initiative is in trouble before it’s even fully off the ground.
“I’ll just call them what they are: These are trickle down economics,” said Wegela, D-Garden City. “You give tax breaks to corporations and businesses, they create jobs … and then that trickles down throughout society – that doesn’t work.”
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When asked about potential Democratic pushback on the proposal, Whitmer spokesperson Bobby Leddy seemed unphased, telling MLive: “We will continue to work with lawmakers on both sides of the aisle who want to find real solutions to make sure Michigan can continue to win good-paying jobs.”
“Governor Whitmer has shown that we can do both: invest in Michiganders AND attract new businesses to our state,” he said in a statement. “She’s brought Democrats and Republicans together to pass historic economic development policies that secured tens of thousands of good-paying jobs and invested billions of dollars into our economy.”
Announced Wednesday, High-Wage Incentive for Regional Employment (HIRE) Michigan would effectively revive and rename the spirit of former Gov. Rick Snyder’s Good Jobs for Michigan program, which ended in 2019. The effort is supported by the Michigan legislature, both chambers of which are under Democratic control, and seeks to lower payroll taxes for small businesses.
Bills enacting the program passed out of the Senate Economic and Community Development Committee in October. Under the legislation, eligible businesses could keep up to 100% of income tax withholdings from new jobs, provided they keep a certain number of jobs at a specified median wage. Businesses would also be able to capture $100 million annually, rather than the $200 million limit under the previous program.
“For Michigan to remain competitive, we need to have tools that help support business growth and business relocation in the state of Michigan,” said Sen. Sam Singh, D-East Lansing, co-sponsor of those Senate bills. “When you look at our surrounding states: Almost all of them have a tax capture program like the HIRE Michigan bills would create. And for us to stay competitive, we have to do that.”
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But to Wegela, a progressive member of the House Democratic caucus, other states having a similar program isn’t good enough reason for Michigan to follow suit. He said the bills do not provide a “long-term solution” to job creation in Michigan, and that iterations of the HIRE program haven’t worked in the past.
“We’ve continued to give corporations such as Ford, GM and others tax abatements and tax breaks, and they either go back on their promises, don’t create the jobs that they said they were going to, or they just leave in a few years,” Wegela said.
That’s not just a thought held by some Democrats. Groups like the Mackinac Center for Public Policy, a nonprofit research an educational institute, panned the proposal as simply “giving handouts to select companies,” in a statement ahead of Whitmer’s address.
State aid for large corporations has seen split support over the years, with usually more progressive Democrats and hardline conservative Republicans coming together to oppose the move. Losing even one vote for Democrats, should they return to a 56-54 split House come April, would mean needing to possibly concede features of the program to Republicans – or…
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