- change ups
That was then, this is now
“Why does he deserve a tax break (and not me)?” “They’re just giving away my tax money.” “If they want to succeed, let them work for it.”
We’ve all heard the criticisms about unfair business advantages. We’ve all heard about the merits of blood, sweat and tears versus the easy way out. We’ve all heard about the best way to do business — pulling yourself up by your bootstraps.
And we’ve all suffered through the Great Recession.
The last three years have been the great equalizer in the business community. The strong did survive. The herd was thinned dramatically. The savvy saw their business opportunities and pounced.
Now, with that catastrophe in the rearview mirror, we are realizing that we are all in this together. We survived. Some of us even thrived. But what does this brave new world look like?
Well, from an outsider’s point of view, it’s not real rosy. The annual Forbes list of Best States for Business and Careers, referenced in today’s Street Talk column, takes a dim view of Michigan’s business climate —a very dim view.
To paraphrase that somewhat humorous GEICO commercial with antelopes and a lion: “It’s embarrassing. Embarrassing! C’mon … you’re better than this.”
And we are. Or at least we should be. There is no way Michigan should be the 47th best state for anything, but especially for business. There is absolutely no way the Wolverine State should be ranked dead last for labor supply, but it is.
How does this happen? Perception: Michigan is an automotive-driven state and the auto industry is hurting (not true on both counts). Michigan is a union state and unions destroy the business climate (again, not true on both counts). A heavy-handed government and suffocating taxes combine to strangle job growth here (once again, not true).
Just like the perception that tax abatements give unfair advantages to certain businesses, breaks that are bestowed simply by virtue of asking. Here are the facts: The Grand Rapids City Commission approved 18 industrial tax abatements in 2012 after ratifying 22 the prior year. Of the 18 in 2012, 16 were PA198s, meaning half of a firm’s real and personal property taxes would be exempted for up to a dozen years once an investment was made in expansion and equipment. The other two were for PA328s, which abates personal property taxes for purchases of machinery, equipment and other business items such as office furniture.
Those 18 abatements are worth $40 million in private investment and 477 new jobs. To get that investment, the city gave up about $98,000 in property tax income for the length of the abatements, which ranged this year from five to 12 years. But the city will gain roughly $157,000 in new income tax revenue if all the projects are completed as laid out.
Pulling together will break that perception. Moving ahead will break that perception. Taking chances and investing in West Michigan will break that perception. Sniping about tax breaks, unions and government regulation will not.
If we learned anything from the Great Recession, that was it. To the survivors and can-do entrepreneurs: Have a happy — and prosperous — New Year!
— Tim Gortsema