PolicyGuy

Friday, November 19, 2004


Tax Incentives for Jobs That No Longer Exist.
In the wake of the merger between Sears and K-Mart, the Mackinac Center's Michael LaFaive offers this observation:
I applaud The Detroit News for its editorial on tax incentives for Kmart ("Kmart Tax Incentives a Questionable Investment," Oct. 29) but hasten to point out that Kmart has already received generous state tax incentives - twice. In 1998, and again in 2000, the Michigan Economic Growth Authority declared Kmart an economic "winner" and awarded a total of up to $29 million in incentives. The second MEGA package was approved just 17 months before the company went bankrupt. Through 2001, Kmart earned more than $6.1 million in Single Business Tax relief for creating jobs that no longer exist.

As part of its MEGA agreement, Kmart promised to maintain a base employment as high as 4,159 jobs. Today, the corporation employs about 2,000, and it has been promised a third incentive package, worth about $40 million, if it promises to maintain at least 1,500 jobs.

A better alternative would be to concentrate on the fundamentals: cutting taxes and regulation for all Michigan businesses.

"Justice Louis D. Brandeis'?s metaphor of the states as "laboratories" for policy experiments ... had almost nothing to do with federalism and everything to do with his commitment to scientific socialism. .... To this day, it continues to inhibit a truly experimental, federalist politics." -- Michael S. Greve

Home
BlogMatrix