GM got $3.8 billion in tax credits after 2009 bankruptcy | Michigan


(The Center Square) – When General Motors filed for federal bankruptcy protection in 2009, Michigan gave the auto company $3.8 billion in tax credits, urging the automaker to keep the jobs in the state.

For more than a decade, that amount had been kept secret by the state and the automaker — until last month, when the Michigan Supreme Court ruled that the Michigan Economic Development Corporation must fully disclose the Michigan Economic Growth Authority taxpayer grants it provided to GM.

The decades-long secrecy shows how lucrative “corporate welfare” can be for businesses at the expense of taxpayers when the government tries to pick winners and losers, said John Mozena, president of the Center for Economic Accountability. , at The Center Square.

Mozena quoted a 2018 analysis from the Mercatus Center, which found that Michigan gave more corporate tax breaks than it received in corporate taxes, due to automakers taking in MEGA credits.

Mozena said the big problem was that the tax credits didn’t have a simple price, but were instead based on workers’ wages. In 2014, GM donated $9,000 profit sharing checks.

“So when they unexpectedly cashed in $224 million in tax credits that year, it helped throw the state budget into crisis less than halfway through the fiscal year,” Mozena wrote in an email. “The Legislature and Governor Snyder had to make emergency cuts, with the police and prisons, along with community colleges and teachers’ pension funds, taking the biggest hits.”

GM’s senior director of public policy communications Jeannine Ginivan told The Center Square it was a “shutdown week” and did not respond at press time on the number of Michigan employees that GM had in 2009.

The Detroit News reported that the administration of Governor Gretchen Whitmer in 2020 removed a tax credit requirement for GM to maintain at least 4,000 jobs at the Renaissance Center in Detroit in exchange for a reduction in the amount owed to the automaker.

GM originally received a cap of $3.8 billion to cover the 2010-2029 period under MEGA, which the company reduced from $325 million in January 2020 to $3.4 billion.

Since 2011 in Michigan, GM says it has created 10,078 jobs, invested $18.6 billion and retooled Orion Assembly, Factory ZERO and Pontiac Metal Center to support electric vehicles.

“We are proud to bring these jobs and investments to our home country and remain fully committed to executing our plans here,” Ginivan wrote in an email.

GM says it employs more than 52,000 workers in Michigan at 31 facilities.

For context, $3.8 billion is just more than the bbudget for the city of Detroit in fiscal year 2009-2010, when the city and Wayne County overcharged Detroit homeowners on property taxes by hundreds of millions of dollars in an attempt to balance the city’s budget, a Mozena said.

Mozena said that in 2021 the Michigan Strategic Fund reported that companies still hold an estimate $4.57 billion in MEGA credits, despite the absence of new transactions since 2011.

Mozena said it was “more likely” the tax credits were the brainchild of Michigan politicians wanting to “save” the auto industry instead of GM’s long-term game of cashing in credits on decades.

“I think it was much more likely that the Michigan politicians were desperate for a way to make it look like they were ‘saving’ the auto industry, they kept the price of this effective gift of free publicity secret for their re-election campaigns and we are still paying it today,” Mozena wrote.


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