Back To The Old Milliken-Williams Days?

May 25, 2004
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Because Michigan’s perverse Single Business Tax penalizes a firm the instant that it hires a new worker, the Legislature this session passed a measure to offset that penalty with a tax credit.

To prevent businesses from obtaining those credits by subterfuge, the legislature built in safeguards that allow a company to qualify for the credits only by showing that the job:

  • Has health coverage.
  • Did not exist during the previous tax year.
  • Was not merely a transfer within a corporate conglomerate.
  • Represents a net increase in full-time equivalent jobs in the state.

Last week, Gov. Granholm killed the bill.

As the rather severe conditions above indicate, the legislature’s strategy wasn’t a give-away for the corporate world. Instead, it pointed toward something Michigan has needed for a generation: a way to encourage employment by all firms and, thereby, to help bolster job creation in the sector that hires the largest number of Michigan citizens and creates the most wealth: small businesses.

The governor’s veto hurts Michigan from two standpoints.

First, it is a direct attack on the legislative plan called JOBS Action, a long-term, across-the-board strategy to make Michigan more employer-friendly.

Second, in a period of rapidly intensifying global competition, it figuratively illuminates a global billboard that says “Michigan: Easy Pickings!”

Beyond that, the veto also appears to show that Lansing is returning to a defensive, crisis-management economic strategy. You know the sort of thing: William Milliken frowning and making worry-noises about “saving Continental Motors for Michigan,” Soapy Williams wasting boundless energy trying to get Norge and its union to “work together,” Gov. Granholm offering to spend millions to keep Federal Mogul in Michigan, and John Engler racing about trying to secure the supercollider for Michigan.

Of the four governors, Engler at least followed a vision for a broadly improved business climate that would help all businesses — including little firms that, taken together, employ lots more citizens than the Big Three.

The Granholm veto struck down a key small business component of a larger strategy. This might be the time for the governor to wonder just how many other major employers are lined up behind Federal Mogul, Johnson Products and Electrolux, waiting to make their departure announcements.

Maybe Lansing’s historic blindness about Big Business and its beefy tax receipts has afflicted the governor. Neither she nor Lansing’s bureaucracy seem to grasp that Ford, GM and even Alticor all started tiny — and at a time, moreover, when they were burdened neither by the global economy, nor MIOSHA, nor EPA, nor litigious sharks, nor the Single Business Tax.

It’s certain that most small businesses never will become large. But a few will and the governor should give some thought to the notion that when little firms grow, they are as free to do their growing in Indiana, Texas or Kansas … or Guangjou.    

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