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Tag: Reward

Michigan Business Done Right - Competition

By JGillman, Section News
Posted on Wed Aug 26, 2009 at 07:39:47 AM EST
Tags: Michigan, Business, Competition, Reward, Free Markets (all tags)

I have competition, in fact I used an earlier article here to discuss how government can become involved in that competition. In that piece and others I have written, I have suggested (sometimes a little more subtly) the Michigan Film Credit to be a waste of taxpayer money on its face and an unnatural market affecting mechanism at its core. The credit, based on a study that shows positive impact and attraction of jobs in a certain sector when that sector's rewards are sweetened, much like pouring honey on the ground and eventually seeing hundreds of ants converging. (Or maybe better described as doing something else.. that attracts flies..)

Its true. Reward DOES affect activity, and even our state government understands that. But its only a part of the impact, and the other part which they use to FUND that reward strategy has its inverse effect. How many DE-rewarded (those who PAID the taxes to support the incentive) businesses did not expand, innovate, or hire new workers as a side effect? In a recent Mackinac center release:

"It is conceivable that programming the actual costs of this subsidy into the economic model (known as REMI) would show that the Michigan Film Incentive destroys more jobs than it creates," said LaFaive, who has used the model and studied it at REMI headquarters in Massachusetts. "The revenue has to come from somewhere. In this instance, it is reasonable to conclude that it is coming from existing Michigan businesses that have been paying the new Michigan business tax and its related surcharge. As much as $48 million was taken from businesses in 2008 to subsidize filmmakers, and this has probably destroyed more jobs than it could have hoped to create."

In Michigan's bid to be more "competitive" with regard to attracting the film industry, it does so by extracting from the competitive ability of the other businesses. Businesses which have already chosen to be here WITHOUT a reward from big government.

(4 comments, 1329 words in story) Full Story