Guv Jen was in town yesterday to make the case for her $2 billion bond proposal to boost the fortunes of high-tech industry in Michigan. She also promoted her plans for reforming the state's dysfunctional single business tax. Let's start with what the governor got right.
The single business tax is excessive and convoluted, penalizes capital investment and growth, and has little relationship to a company's means to pay. Governor Granholm wants to reduce the rate of the SBT by about a quarter. That's a step in the right direction, but well short of the best solution: Its elimination.
The governor also wants to lessen the tax penalty manufacturers bear by not getting a sufficient offset from the SBT on the property taxes they must pay on the capital equipment they own. It's good that the governor recognizes that manufacturing is and will remain one of the foundations of the state's economy. However, what's good for one sector of the economy is good for all when it comes to tax reduction. Her proposed property tax offset should apply to all businesses. No more picking winners and losers.
However, Guv Jen's two-billion-dollar bond proposal is all about picking winners and losers -- and like most politicians eager to hand out taxpayer dollars to businessmen, she's picked the losers to win. The governor's idea is that the state will know how to invest taxpayer dollars, either directly or indirectly, in high-tech business opportunities that at the end of the day will produce 72,000 top-notch jobs for Michiganders. If this notion were not wrongheaded enough, Guv Jen devoted most of her blather to the promise of making River City a center of bio-tech prosperity.
Well, the cynical among us might ask what else could the good governor do when the Republicans in the state legislature are about to pass a competing one-billion-dollar bond proposal tightly focused on funding the formation of bio-tech businesses in Michigan? Get on the bandwagon, right? Wrong. What is it about this buzzword, "bio-tech", that has encouraged all of us to lose all touch with reality? Michigan, let alone Grand Rapids, is not and will not be a center of the bio-tech industry in this country -- and even if that did happen, it is not the engine for job creation all of bio-tech's boosters say it is. Whether Republican legislators dump a billion taxpayer dollars on bio-tech or Guv Jen double that, its promise will remain a false one.
The reason why is simple: The competition is fierce and already well ahead of us. Boston, San Diego, and San Francisco are great metropolitan centers presently as loggerheads in pursuit of the bio-tech brass ring. Recently Microsoft billionaire Paul Allen (whose $20 billion fortune is an entire magnitude larger than the estate of local bio-tech wannabes, the Van Andels) unveiled a redevelopment plan to turn a huge section of downtown Seattle into a bio-tech park anchored by a world-renowned cancer research center and a medical research campus of a major university. (Sound familiar? Good. Does it also sound like our planned "medical mile" along Michigan Street has been out-classed? Not so good.)
The fact is that there are several dozen U.S. cities with a plan in some stage of development or another to become the country's bio-tech center. While one will surely become the Silicon Valley or the Motor City of bio-tech and a few more will blossom as satellites to that center, all the rest will go down the drain. If private investors want to bet that River City will be one of those very winners, I wish them luck because that would be a plus for us.
But the bets on bio-tech that the Republicans and Guv Jen want to make are both losers for the taxpayers. That's because all the odds are against Michigan winning the bio-tech battle, and even if it did, the jobs that ordinary taxpayers were promised in exchange for their tax dollars will not be there. The few good ones will go to outsiders with diplomas and the working stiff ones will go overseas.