Ann Arbor State Rep. Yousef Rabhi Introduces Legislation to End MAGA Credits By 2022, But Taxpayers Still on the Hook for $300M

By The Ann Arbor Independent Editorial Team Last updated Nov 18, 2019 0

by Nick Manes

Efforts to permanently phase out one of the state’s old economic development programs now have bills in both chambers of the state Legislature.

A bipartisan group of state representatives this week introduced legislation in the House to permanently end the Michigan Economic Growth Authority (MEGA) tax credit program by Fiscal Year 2022. No new tax credits have been doled out by MEGA since 2011, but at present, the state remains on the hook for more than $7 billion in unclaimed credits over the next decade.

The credits are mostly held by the Big 3 automakers, GM, Ford and Fiat Chrysler Automotive.

“It’s time we as a state stop putting corporate profits over people. We need to create a tax structure where everyone pays their fair share,” bill sponsor state Rep. Yousef Rabhi (D-Ann Arbor) said in a statement.

“We are introducing HB 5254, which will ultimately eliminate a major drain on our state budget,” Rabhi said. “Corporate tax breaks don’t create sustained economic growth; they come at the expense of investments in the public and civic infrastructure that actually do attract business to Michigan.”

Rabhi’s legislation has a total of 12 co-sponsors, split evenly between Republicans and Democrats. The bill is a mirror of legislation introduced in September in the Senate by the chamber’s Senate Minority Leader Jim Ananich (D-Flint), as the Advance previously reported.

Just like Ananich’s bill, the House legislation would:

Limit MEGA payouts to $200 million for Fiscal Year 2020;
Limit MEGA payouts to $100 million for FY 2021
End MEGA payouts in FY 2022