House intros bipartisan bill to end MEGA tax break payments

    GM headquarters, Detroit | Image by Alberto Adán from Pixabay

    Efforts to permanently phase out one of the state’s old economic development programs now have bills in both chambers of the state Legislature. 

    Yousef Rabhi

    A bipartisan group of state representatives this week introduced legislation in the House to permanently end the Michigan Economic Growth Authority (MEGA) tax credit program by Fiscal Year 2022. No new tax credits have been doled out by MEGA since 2011, but at present, the state remains on the hook for more than $7 billion in unclaimed credits over the next decade. 

    The credits are mostly held by the Big 3 automakers, GM, Ford and Fiat Chrysler Automotive. 

    “It’s time we as a state stop putting corporate profits over people. We need to create a tax structure where everyone pays their fair share,” bill sponsor state Rep. Yousef Rabhi (D-Ann Arbor) said in a statement. 

    “We are introducing HB 5254, which will ultimately eliminate a major drain on our state budget,” Rabhi said. “Corporate tax breaks don’t create sustained economic growth; they come at the expense of investments in the public and civic infrastructure that actually do attract business to Michigan.”

    Rabhi’s legislation has a total of 12 co-sponsors, split evenly between Republicans and Democrats. The bill is a mirror of legislation introduced in September in the Senate by the chamber’s Senate Minority Leader Jim Ananich (D-Flint), as the Advance previously reported.

    Ananich: End big business tax breaks to fund roads, schools

    Just like Ananich’s bill, the House legislation would:

    •  Limit MEGA payouts to $200 million for Fiscal Year 2020;
    •  Limit MEGA payouts to $100 million for FY 2021
    •  End MEGA payouts in FY 2022

    A spokesman for House Speaker Lee Chatfield (R-Levering) had no immediate comment on the speaker’s position on the legislation, but some members of the House GOP caucus offered their full-throated support for the policy. 

    “I am honored to be part of the bipartisan coalition supporting HB 5254,” state Rep. John Reilly (R-Oakland Twp.) said in a statement. “This important legislation, which will eliminate the expensive MEGA credit program, will help to ensure our state’s fiscal health well into the future.”

    Nick Manes
    Nick Manes covers West Michigan, business and labor, health care and the safety net. He previously spent six years as a reporter at MiBiz covering commercial real estate, economic development and all manner of public policy at the local and state levels. His byline also has appeared in Route Fifty and The Daily Beast. When not reporting around the state or furiously tweeting, he enjoys spending time with his girlfriend, Krista, biking around his hometown of Grand Rapids and torturing himself rooting for the Detroit Lions.