Michigan Capitol Building by Robert Du Bois is licensed under CC BY-NC-SA 2.0
A new report from the Mackinac Center for Public Policy adds to the overwhelming evidence that taxpayer-funded corporate subsidies fail to deliver the economic results politicians promise.
According to the report, Governor Gretchen Whitmer’s administration authorized approximately $2.7 billion in subsidies for eight high-profile economic development projects that were promoted as “generational” investments expected to create 20,595 jobs. Instead, after Michigan has already spent $1.8 billion, those projects have produced just 602 jobs, or roughly three percent of what was originally promised.
That amounts to nearly $3 million in taxpayer spending for every job created.
The report finds that none of the eight flagship subsidy deals lived up to the expectations set when they were announced. Two projects were ultimately canceled, two produced little more than vacant land, one resulted in a largely unused facility, and two primarily supported existing manufacturing operations rather than creating significant new employment. Even the battery plants that remain under construction have already reduced their projected job projections.
Michigan’s experience should serve as another reminder that politicians have a poor track record picking winners and losers in the marketplace. Rather than allowing businesses to compete on a level playing field, targeted subsidies reward politically favored companies while shifting the financial risk onto taxpayers.
These incentive packages also disadvantage the countless small businesses that create jobs without receiving special treatment from the government. Instead of negotiating billion-dollar deals behind closed doors, lawmakers should pursue policies that improve the business climate for every employer.
Lower tax rates, fewer regulations, and a stable economic environment encourage businesses to invest without requiring taxpayers to subsidize private companies. Those reforms foster long-term growth while avoiding the costly gamble of betting public dollars on a handful of politically connected firms.
The Mackinac Center notes that research on targeted subsidy programs has repeatedly failed to show meaningful economic benefits, and Michigan’s latest experience appears to fit that pattern. Taxpayers have little to show for billions spent on corporate welfare, and lawmakers should think twice before authorizing another round of subsidies.
Government cannot subsidize its way to lasting prosperity. Michigan would be better served by broad-based policies that promote economic growth for every business rather than continuing to spend billions chasing headline-grabbing subsidy deals.
The full report can be found here.
