"A Michigan Senate committee last month took a quick vote to pass several bills that could offer massive financial payouts to real estate developers, including Dan Gilbert, the law's chief private-sector advocate.
The legislation, Senate Bills 1061-1065, resembles tax increment financing laws on steroids.
TIF allows for collection of revenues — usually local property taxes — generated from alleged growth of a particular development.
The proposed legislation would also allow local personal income taxes and sales and use taxes to be earmarked for private developers.
This proposal is old wine in new skin.
Programs such as this are designed to do one thing:
Transfer wealth from the many to a few.
Michigan has had and continues to operate many programs that do this.
The crony capitalists who benefit most are typically well-connected politically.
They often they get what they ask for: Red Wings owner Mike Illitch persuaded state and local governments to help him finance his new hockey stadium, and $250 million of it is expected to come from a TIF arrangement.
The chief argument supporting this new legislation is that "but for" special treatment, such development would not happen.
This talking point was repeated ad nauseum by apologists for the Michigan Economic Growth Authority, a business subsidy program.
- MEGA was the state's highest-profile business incentive program. The Snyder administration stopped giving out new awards, but the state is still paying out about $1 billion this year on old refundable tax credits. It's a hefty price tag, but the jobs promised rarely materialized — only 2.3 percent of awards met or exceeded projections. Lawmakers should be skeptical that these schemes improve the state after reading what the economic literature says about them. Of the five scholarly studies done on the MEGA program, four found a zero to negative impact and the fifth only showed a small positive one.
- The TIF literature is equally unflattering. A 2015 Ball State University study found that TIF districts in Indiana were actually "associated with less employment, less taxable income and slightly higher tax rates." A 2010 University of Chicago Law Review article finds, "There is little clear evidence that TIF has done much to help the municipalities that use it, and it is also a source of intergovernmental tension and a site of conflict over the scope of public aid to the private sector."...