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Large state tax credits given to automakers due this year

Feb 5, 2015

GM headquarters.
Credit Sarah Hulett / Michigan Radio

It has become crystal clear: Michigan's budget will have some mighty big holes this year and into the future. That's because billions of dollars of state tax credits awarded largely to Detroit's three automakers are coming due. The credits were aimed at keeping plants and jobs in Michigan during the Great Recession.

Detroit News business columnist Daniel Howes believes before we get caught up in finger-pointing, grandstanding and wailing, a history lesson is in order.

Howes says billions of dollar in tax credits were issued to the automakers that were contingent on the companies making investments and hiring workers. Well, they made the investments and hired the workers, and now they’re in the longest growth period the industry has seen since the 1960s, beginning their seventh consecutive year of market growth, according to Howes.

"The problem with a program like this is that it’s not very transparent. Once the credits go to the companies, the companies can decide when they're going to claim them. It's essentially like getting bills in the mail that you don't know are coming," says Howes.

But Howes isn't arguing against the credits' initial use. "Had we not had that bailout, had we not done some of these tax credits and kept some of these jobs, I don't think we know where we would be."

*Listen to our conversation with Howes above