In pushing to replace the despised Michigan Business Tax with a simplified corporate income tax, Gov. Rick Snyder said the new tax would be fairer and promote job growth.
The tax, which took effect in 2012, also gave businesses a $1.7 billion tax cut.
Business groups praised the new tax structure, which was the economic centerpiece of Snyder’s 2010 election campaign.
But a recent survey of Southeast Michigan business owners and executives found the tax overhaul has had little impact on hiring and wages.
Seventy-three percent of the 300 employers questioned said the new business tax has had no influence or only a minor influence in their decisions to hire more workers or boost wages.
Lansing-based polling firm EPIC-MRA conducted the survey for Crain’s Detroit Business and the Detroit law firm Honigman Miller Schwartz and Cohn.
Business owners and executives in Wayne, Oakland, Macomb, Livingston and Washtenaw counties, the state’s largest economic region, were queried in the mid-November survey.
Their views on the state’s corporate income tax likely reflect what economists have told me for years: state taxes are too small a share of overall business costs to play much of a role in job growth.
Other factors, including market demand for their goods and services, regulatory and health care costs and the overall state of the economy are more important considerations in hiring decisions.
The top concern of businesses surveyed isn’t taxes, religious freedom, gay rights or even road funding. No, their biggest worry involves keeping existing customers and finding new ones.
That response indicates that while the state’s economy is much improved from just a few years ago, businesses are still scrapping for every dollar of revenue.
But despite the view by most businesses surveyed that the change in state business taxation isn’t much of a factor in job growth, many said state government can play an important role in boosting the economy.
Respondents said providing funding for worker retraining to fill available jobs was the most important thing the state could do to promote job growth.
Business owners and executives also said there are some tax issues that are important for job growth.
Their second-highest priority was tax incentives “specifically aimed at creating new jobs and preserving existing ones.”
Michigan eliminated business tax incentives under the Snyder reforms. It now gives upfront grants and loans to companies that add jobs in the state, but not for job retention.
Respondents also said there are a number of actions policymakers should take to improve the overall economy and quality of life in Michigan.
Among them are greater support for K-12 education, improving roads, getting a new bridge connecting Detroit and Windsor built and providing post-bankruptcy financial support for Detroit.
Such public investments are generally more important for sustained economic growth than changes in state taxes.
Email Rick Haglund at email@example.com
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