Michigan uses more tax incentive programs than the average state, according to a new study by the Upjohn Institute.
The report shows that Michigan gives more tax breaks to businesses than most neighboring states. Michigan's total incentives in 2015 were also higher than the national average.
Tim Bartik, Upjohn Institute senior economist and the study's main author, said business incentive programs can end up costing states a lot of tax revenue.
“Because we run these incentives, we cannot afford to do as much spending on public schools as we otherwise could. We cannot afford to give as many individual tax cuts as we otherwise could,” Bartik said. “There’s an opportunity cost.”
Bartik believes this study can help the public understand tax incentives.
“It sets the stage for being able to actually have a better-informed public debate about incentives, instead of just debating it as an abstract,” he said.
Bartik said these tax break programs are largely used for development in urban areas. Michigan’s legislature is currently debating the incentive programs.
The state has been cutting back on those incentive programs, ending its largest program back in 2005. But Michigan still uses more resources for tax breaks than every state it touches except Indiana.