Simulating the Effects of Michigan's MEGA Tax Credit Program on Job Creation and Fiscal Benefits

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Upjohn Institute Working Papers

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Bartik, Timothy J.; Erickcek, George A.
W.E. Upjohn Institute for Employment Research; W.E. Upjohn Institute
tax incentives; business tax credits; fiscal impact analysis; labor market benefits; regional multipliers; tax policy; state and local economic development policy; MEGA; Michigan Economic Growth Authority; Michigan; ECONOMIC DEVELOPMENT; Local labor markets; Regional policy and planning; Business and tax incentives; Michigan studies; Economics; Regional Economics; Social and Behavioral Sciences
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This paper simulates job and fiscal impacts of Michigan’s MEGA tax credit program for job creation. Under plausible assumptions about how such credits affect business location decisions, the net costs per job created of the MEGA program are simulated to be of modest size. The job creation impacts of MEGA are simulated to be considerably larger than devoting similar dollar resources to general business tax cuts. The simulation methodology developed here is applicable to incentives in other states.