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Snyder: Simpler Biz Tax Already Creating Jobs

Gov. Rick Snyder Monday defended his decision to do away with most state tax breaks and said his simplified business tax code is already paying dividends in new jobs.

Snyder's remarks came at Michigan Emerging, an entrepreneurship support event that drew more than 500 people to Cobo Center in Detroit.

Snyder said the film industry tax credit "didn't make sense from an economic point of view compared to the jobs it created. There are higher priorities."

And Snyder said the original Life Sciences Corridor, conceived by Gov. John Engler to invest the state's tobacco industry settlement money in life science companies, was "too much a case of the government picking winners and losers."

Snyder said his new state business tax -- a flat 6 percent tax on profits that goes into effect Jan. 1, replacing two earlier much more complicated business tax systems -- has "already seen positive impact in terms of people knowing that it's coming. It will take time. We will see early results but the inflection point will take time."

Overall, Snyder said, state tax credits for specific business projects "are a bad idea, and we've wiped most of them out at the state level. One, they're not transparent and there's not a lot of accountability for them. I wonder how many people in this room know that our state budget is now $500 million in the hole because of tax credits we've given. That's not a good way to budget."

Snyder said earlier administrations have given out tax credits that last as far as 2032 and are worth a total of $8 billion.

Snyder said that as an alternative to long-term tax breaks, "My opinion is that if someone has a good enough project, they should just raise their hand and say, 'Write me a check.' So we have a fund for investments in critical situations, but it's much more defined and not hidden in the tax code."

Snyder reiterated his "five keys to a reinvented Michigan."

* Technology. Snyder said the state's research universities give it a great foundation in technology, and "we need to support and invest in them." The state is also rich in inventors and corporate research and development.
* Talent. "We have fabulous talent in our state," Snyder said. "We have talent looking for opportunity." Snyder said the one weak spot in Michigan's talent pool is the "serial CEO," which founds one company after another. And he said the state should make efforts to keep its foreign university students here after graduation because "they are job creators."
* Capital. Snyder laid out the four types of private capital -- angel, seed, venture and second stage -- and noted that the state "could do a lot better at the angel level. We have a lot of successful people here but they tend to be risk averse and for the most part have not been involved in angel investing."
* Infrastructure -- not roads and bridges, "although that's critically important for our large industries," but the infrastructure of people who support entrepreneurship -- service providers, attorneys, accountants, engineers, Web designers, marketers, and "government that treats you as a customer, not as the enemy." Snyder said his flat 6 percent business tax will help here, as will his investment in "economic gardening right here in our own back yard instead of trying to bring new people in."
* Culture -- Snyder said Michigan's culture has grown "too negative, too much of a win lose mentality. We need to change our culture to one that's positive, forward-looking, inclusive, that's about Michiganders winning together." He said his administration will "blame no one for anything, and we don't take credit for anything, we stay focused on solving problems."

And Snyder said those who view business as a dictatorship are mistaken.

"People say it must be a big change to go from being in business to the government, because in business you could tell people what to do," Snyder said. "Frankly, that's a really ignorant statement, because the only way you succeed in building a company, in building an organization, is to have a win for multiple parties. Your employees have to win, your customers have to win, your employers have to win, your community has to win."

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