Will tax changes create jobs?

GRAND RAPIDS, Mich. (WOOD) - While critics call them a giveaway to businesses with no guarantee of results, Gov. Rick Snyder touts the tax changes approved by the state House and Senate on Thursday as keys to reinventing the state's economy.

For those looking for work, the hope is that reinvention means jobs -- soon.

Grant Wright, of Lowell, said he's been looking for work for about three years. There aren't enough jobs, and when he does find one, Wright said he's often told he's overqualified.

"It's hard. It's discouraging. You worked all your life and basically, you're seeing it all slip away now because you can't find a job," the 59-year-old told 24 Hour News 8.

The governor told reporters Thursday that the new plan -- which he's expected to sign into law -- brings certainty, consistency and fairness to people who put other people to work.

"If you really want to talk to the job creators, having a system with certainty, consistency, fairness is the fundamental thing people are looking for to say, they want to do business in Michigan," Snyder said.

Wright said he's cautious about expecting too much, but remains hopeful that the changes will lead to jobs.

"I think it's got to get better," he said. "Anything you can do for business has got to be better."

24 Hour News 8 asked accountant and tax lecturer Douglas Van Der Aa whether there's a clear answer to the question: Will the new business tax in Michigan create jobs?

"In and of itself, no," Van Der Aa said. "Short of throwing money at business like we did with the movie industry, no tax change by itself creates jobs. But what you do is reduce the costs and the overhead of business in engaging -- in doing what they do, trying to make a profit and therefore creating jobs."

The lecturer, who's taught at Grand Valley State University and Hope College, said the current complex, one-of-a-kind state business tax scares companies away.

"In effect, we have become the joke about the kid that's so ugly, you tie steak around their neck to get the dog to play with them," Van Der Aa said.

The new tax plan is more in line with what businesses contend with in other states. But Van Der Aa said he has concerns about paying for the business tax cut in part by phasing out tax exemptions for some seniors.

"Repossessing something from them that has been promised for a long time is very painful," he said. "And I am uncomfortable with that."

Michigan State University economics Professor Charles Ballard told 24 Hour News 8 by e-mail the current business tax "has some very ugly features, and I have long been an advocate for reducing or eliminating it, as long as we make up the revenues."

He said he's worried about the cuts in education spending that are part of the overall budget plans.

"I think education is the most important thing for determining the long-run success of the Michigan economy, not just in terms of the number of jobs, but also in terms of the level of earnings and the quality of life," Ballard said in an e-mail. "In the long run, if we create a more business-friendly tax system, but simultaneously reduce our investments in education, I believe we will be worse off, not better off."