Michigan lawmakers are currently looking to advance a new economic development framework that could impact tax breaks for GM and the state’s other major automakers (Stellantis and Ford).
As reported by The Detroit News, the Real Jobs for Michigan package, which is backed by state Republicans, seeks to replace the MEGA tax credit system introduced in the 1990s with a new structure that rewards companies for creating high-wage positions. GM has been one of the major beneficiaries of MEGA credits since the Great Recession, and the move would mark a transition towards a new incentive structure that has the potential to benefit both large and small businesses.
Introduced by state Reps. Mike Hoadley and Mark Tisdel, the new legislation would allow companies to recapture a portion of employee income taxes that are normally withheld, and serves as a response to Democratic Gov. Gretchen Whitmer’s request for new economic development tools.
The MEGA program was originally established in the 1990s and expanded during the Granholm administration, awarding large “retention” credits to GM, Ford, and Stellantis for maintaining a large workforce after the GM and Chrysler bankruptcies in 2009. Under the current agreement, the Big Three Detroit automakers are set to claim about $500 million annually through 2029. However, House leadership has pushed to end the program early, and instead move the remaining payments into a new 10-year plan.
Under the plan, automakers would receive the balance of their MEGA credits in 10 equal annual installments, assuming they maintain 95 percent of their workforce as of September of 2025.
The Real Jobs framework ties incentives directly to new full-time positions paying at least 150 percent of a given region’s median wage. Credits would be capped at $50 million annually and divided across certain employee-based tiers, with prorating if total claims exceed that limit. Supporters, including the Small Business Association of Michigan, note that income-tax capture could benefit businesses small and large, rather than just large companies.
Automobile Magazine-USA
