Michigan to Learn Very Taxing Lesson

Michigan lawmakers, including Republicans, seem poised to attempt a tax revenue boost by boosting their state's already high taxes. Prediction: tax revenues will further erode. Michigan business owners will now fear this tax increase, and worse: a state government that addresses budget problems with tax increases. Outside businesses considering Michigan now have a new reason to stay away.

Michigan legislators should all read some economics textbooks and learn how highly taxed localities can increase tax revenue: cut tax rates! Get the interstate commerce boosted, attract new businesses, hang-on to home businesses considering a move to lower taxed states.

1 comment:

Paul Hue said...


This Spanish firm wants to relocate here due to "tax incentives" (lowering tax rates boosts tax rev). But that was before its decision-makers learned that Mich was raising other taxes!


A Spain-based aerospace development firm is one of seven companies looking to locate or expand in Michigan with the help of tax incentives, creating 1,736 jobs, state economic officials said Tuesday.

Aernnova Engineering US will lease a facility in Pittsfield Township to operate a state-of-the-art aerospace engineering center and hire 600 workers, mostly engineers. The firm will invest $10 million in the project and expects to be operating in six to eight weeks.

The Michigan Economic Development Corp. helped swing the deal with $18.5 million in state tax credits over 15 years.

"Aernnova's decision to choose Michigan shows we can compete and win the fight for new investment and new jobs," Gov. Jennifer Granholm said Tuesday in announcing the company's decision to locate near Ann Arbor.

For Michigan, the 1,736 new jobs will be a much-needed shot in the arm. The state has one of the highest unemployment rates in the nation: 7.2 percent.

The other companies include an auto finance company, Credit Acceptance Corp., which is spending $3.8 million to expand its headquarters in Southfield and will add 506 positions. MARS Advertising Prize Logic LLC will spend $1.7 million for a Web-based promotions business at the MARS headquarters in Southfield. The move will create 150 jobs.

Combined, the seven companies represent an investment of $53.5 million, state officials said. With their expansions, the companies also are expected to create 1,500 spin-off jobs.

State officials said the companies' decision to expand or launch ventures in Michigan signal the state's efforts to diversify its economy are working.

"These expansions show that companies both large and small, from manufacturers to Web-based marketing firms, are choosing Michigan," said James C. Epolito, president and CEO of MEDC.

Engineer pool key factor

Aernnova looked at competing sites in 15 states before deciding on Michigan, said Luis Perez, the company's senior vice president of commercial.

A key factor in the decision was the availability of engineers in the Ann Arbor region, he said. Many of them are available to begin work now, and the company plans to begin hiring immediately.

"The new center intends to tap the substantial engineering talent pool that exists in this area, including collaborations with the excellent local universities," said Inaki Lopez Gandasegui, chairman and CEO of Grupo Aernnova, the Spanish parent company of Aernnova Engineering.

In considering the area, Aernnova approached the University of Michigan's College of Engineering, which immediately brought in its development partner, Ann Arbor SPARK. Its CEO, Michael Finney, helped to seal the deal when he told the company there were more than 13,000 mechanical engineers within a 30-minute drive of Ann Arbor.

"Aernnova's move to our community highlights how this region's manufacturing heritage can be a catalyst for new economy success," Finney said.

The site's close proximity to the U-M and its highly regarded aerospace program also were factors in the decision, Perez said. He said the company's search committee was impressed with the high quality of life in the Ann Arbor area.

Finally, tax incentives offered by state and local government made the decision easy for them, he said. Pittsfield Township is considering a 12-year abatement worth $304,000 to support the project.

U-M President Mary Sue Coleman said she was elated that Aernnova was coming to the Ann Arbor area.

"Attracting companies like Aernnova specifically demonstrate how the University Research Corridor can -- and does -- make our state a leader in attracting and supporting innovative and entrepreneurial firms," she said.

Other firms pick Mich.

In addition to MARS Advertising Prize Logic and Credit Acceptance, the other companies expanding or moving to Michigan are:

* Azure Dynamics Corp., a Canadian company that plans to relocate its headquarters and certain parts of its development, testing and other operations to Oak Park. The firm will spend $2.3 million and create 125 jobs. The company is a supplier of electric- and hybrid-electric commercial control and powertrain systems.

* Sysco Food Services of Detroit LLC is considering investing $18 million in a 90,000-square-foot expansion of its warehouse in Canton Township. The food wholesaler would hire 130 workers.

* Granvic Investment LLC, a newly created, wholly owned subsidiary of the PRA Company, will spend $2.7 million to expand its operations in Standish. The plastics company will add 75 jobs.

* The Thunder Bay Development LLC will spend $15 million to purchase and upgrade the former Thunder Bay manufacturing facility in Alpena. The company plans to fill 150 new jobs.