Bullet dodged: Michigan offered Amazon $4 billion in tax breaks to locate second headquarter . . . got turned down

By Dan Calabrese

Four billion dollars, huh? Let’s see, I’m one of about 9 million people who live in Michigan, but one of only about 3.8 million heads of household here.

Rob is another. That would put each of us on the hook for about $1,000. That’s quite an offer for a company that would have added 50,000 jobs, especially when the governor is so concerned about the weakness of our workforce he’s spending $100 million on a “Marshall Plan” in the hope he can get people who already live here qualified for the jobs we have now.

Never mind, though. Amazon did us a $4 billion favor and turned us down. Whew!

The bulk of Detroit’s $4 billion in incentives consisted of a 30-year Michigan Renaissance Zone tax break worth $3.3 billion that would have abated city corporate income and property taxes for 30 years, Armstrong said.

Detroit offered to let Amazon live corporate city income and utility tax-free for three decades as well as abate all real and personal property taxes for 10 years and then set the company’s PPT rate a 1.1 percent for the next 20 years.

The other tax incentives included $200 million in tax capture through the Good Jobs for Michigan program, $365 million in tax capture through the transformational brownfield program, $100 million in personal property tax relief and a $40 million cash grant from the MEDC for business development, according to the state’s letter to Amazon.

“We understand that upfront development costs and long-term operating costs are important factors for Amazon’s HQ2 location decision

“We believe that Michigan today offers the most innovative incentive programs in the nation tailored to support the development and long-term operation of transformational investments like HQ2,” Mason and Long wrote in the letter to Amazon officials. “Of course, incentive awards are contingent upon the ability of the project to meet program requirements and are subject to standard application and approval processes. All indications are that program requirements will be readily met.”

I understand that communities offer tax abatements to entice businesses to locate and expand. A long time ago I worked in economic development for a suburban community here in Metro Detroit, and I was actually tasked with writing the community’s tax abatement policy. We developed a point system based on how many jobs were created and how much a project was added to the tax base to determine how many years we would allow the recipient of the abatement to only pay 50 percent of their local property taxes. I’m sympathetic to the idea that you should just have an overall business-friendly environment with low tax rates, and you won’t have to offer special breaks, but I also know that in the real world you can’t tell that to elected officials who want to claim that plum jewel project.

So if it’s your job, you try to make the policy as reasonable as you can.

I think it’s fair to say that offering $4 billion is not reasonable. It was an act of desperation to lure a project that so many people wanted, the competition got completely out of control. And I’m sure other states and cities offered more than Michigan did. I just happen to live here and this information came out on Friday, so I thought I’d share it with you as one example of how shamelessly big companies like Amazon sometimes jerk politicians around to get what they want.

Ironically, Detroit is already in the midst of a real economic resurgence, and we don’t need to do things like this. In fact, we don’t need Amazon at all. I’d rather see 50,000 new jobs created by 100 companies employing 500 people each, or 1,000 companies employing 50 people each. That’s a much more sustainable solution, and it’s doable, and you don’t have to bribe them with incentives that just add to the burden everyone else has to pay.

Thanks for saying no, Amazon. I’m glad you didn’t come. And don’t come back.

Dan writes Christian spiritual warfare novels and does all kinds of other weird things too. Follow all his activity by liking him on Facebook!