Tax incentives posturing A distraction from policy goals

October 12, 2009
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A group of 350 people attended the Economic Club of Grand Rapids luncheon meeting last week to listen to an assessment updating the 2008 Grand Rapids Area Chamber of Commerce Regional Policy Conference initiatives set by more than 600 people from across the state. And on their chairs, those attending the luncheon found a Sept. 4 Wall Street Journal editorial citing "facts" as presented by a Mackinac Center for Public Policy paper, written to discourage continued Michigan tax incentives to attract or retain businesses.

This result is a polarizing distraction from the five top goals established one year ago by the conference attendees and given untold hours of effort. It creates some perception that the Grand Rapids chamber or economic club supports such poppycock, and it belies an underground effort and backhanded attempt to use a successful initiative to elevate the Mackinac Center's opinion.

Consider that the Mackinac Center's study concludes that over a period of 14 years, the state incentive program, largely created by Gov. John Engler, has created or retained just 29 jobs for every 100 "promised." That alone makes the suppositions used by the Mackinac Center for the study suspect in its appraisal.

With more than 20 years experience in recruiting businesses to West Michigan from around the world or retaining those already here, The Right Place Inc. President Birgit Klohs has been at the table with thousands of location consultants from at least a dozen countries. Area Development Magazine surveyed national location consultants this year, finding that 96 percent said state and local incentives were primary issues. Incentives ranked far ahead of highway accessibility, skilled labor availability or energy costs and tax exemptions.

Klohs last week attended an international economic development conference and noted the issue was discussed. Indeed, unless a national policy prevents all states from using such incentives, there would be no playing field in Michigan were incentives scrapped here.

Klohs also noted in the story on page 3 that she often finds herself negotiating far more paltry incentives than those offered by states continuing to add new businesses and new jobs to their economies. For example, in addition to giving a company land — free, North Carolina is offering cash. A business lured there receives a check. Texas offers up to a total of $295 million in deal-closing cash.

It also is worth noting here that the International Economic Development Council honored an economic development agency in Michigan with one of its top international honors — The Right Place. The area economic development team organized this year an Automotive Diversification Conference that drew more than 300 regional automotive manufacturers and suppliers focusing on diversification opportunities.

IEDC chair Ian Bromley noted in presenting the award: "Furthering economic development is rarely a simple task in the best of times, and advancing the cause in the midst of a global financial crisis is nothing less than arduous. As the consequences of the widespread economic turmoil have taken hold, we have seen our members become even more ardent proponents of economic development, flying in the face of one of the most challenging economic environments we have experienced in our careers. We proudly present this award to The Right Place for its superior work during these difficult times."

And that was well deserved.

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