Do Tax Breaks Work?

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Neogen's investment in the city of Lansing is linked to one. Emergent Bio Solutions expansion too. Smart Office Solutions, Niowave, Demmer. All are not paying the city's full rate in taxes thanks to a tax abatement the city believes brought or kept them here.

Lansing Economic Development Corporation president Bob Trezise says an urban area like Lansing could not compete against townships with lower taxes without them.

Other states use them too.

Trezise and others believe they are job creators. The question? It is worth the cost.

New research out of MSU and Wayne State says Michigan municipalities are giving up a billion dollars a year on industrial abatements alone. The studies authors, Dr. Laura Reese, MSU, and Gary Sands, WSU, write that cities waste money trying to save dying manufacturers. The study says suburbs are attracting growth that would've come with or without the money.

A major problem--the study says--is accountability for the companies who got the break. It says 55 percent of municipalities don't evaluate after the fact.

"All of our tax breaks require a lookback after 2 years," Trezise says of Lansing. He says the city only grants a fraction of the requests, but does admit the tax break is not linked to a specific goal for jobs.

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