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After getting $824M in state aid, GM to cut 900 jobs at Orion Assembly

michigancapitolconfidential.com

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Re: After getting $824M in state aid, GM to cut 900 jobs at Orion Assembly

#11

Post by oivey »

legitster wrote: post #10
ojbyrne wrote: post #8

Earlier quoted context omitted.

This doesn't seem like a great site anyway. The link to the WARN notice at the bottom doesn't work, they use the phrase "corporate welfare" somewhat excessively, i.e. they definitely have an ax to grind, and they don't say if the site is actually shutting down or what proportion of the existing workforce 900 jobs is.

> Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective. It's weird to me, even as a relatively free-market guy, that a paper dedicated to small government would be so firmly opposed to tax cuts. I wonder if the distinction between "corporate welfare" and "tax cut" is solely down to the administrati…

It isn’t a tax cut. It’s a tax subsidy unevenly distributed to one company. Extremely not free market.

Re: After getting $824M in state aid, GM to cut 900 jobs at Orion Assembly

#12

Post by [deleted] »

legitster wrote: post #3

> Taxpayers spent $600 million to create 4,000 jobs Taxpayers spent $0. They gave up the potential to make $600 million. And that was only if Orion created the full 4,000 jobs. So they potentially only forwent ~$135 million based on the actual amount of people hired. But it's ridiculous to frame it this way. If a store gave you a coupon for $20 off your order, no one in their right mind would say the store "spent $20…

[deleted]

Re: After getting $824M in state aid, GM to cut 900 jobs at Orion Assembly

#14

Post by legitster »

oivey wrote: post #11
legitster wrote: post #10

Earlier quoted context omitted.

> Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective. It's weird to me, even as a relatively free-market guy, that a paper dedicated to small government would be so firmly opposed to tax cuts. I wonder if the distinction between "corporate welfare" and "tax cut" is solely down to the administrati…

It isn’t a tax cut. It’s a tax subsidy unevenly distributed to one company. Extremely not free market.

It clearly states several times in the article that it is a tax cut. And is there any evidence that it is unevenly distributed to one company? It seems like Michigan offers an open Express application program with clear requirements: https://www.michiganbusiness.org/pre-app/

Re: After getting $824M in state aid, GM to cut 900 jobs at Orion Assembly

#15

Post by rbetts »

peterleiser wrote: post #9
JumpCrisscross wrote: post #4

I wish these stories would describe in more detail whether cash was spent up front (and if it was handed to the company or spent on projects), or if it was e.g. an abatement, that doesn't have an opportunity cost and won't make the company money.

The original announcement from January 2022 provides overall details as well as specific bullet points on each dollar amount of the "corporate welfare": https://www.michiganbusiness.org/press-releases/2022/01/hist...

Thanks for the link:

> A Critical Industry Program grant in the amount of $600 million for the creation of up to 4,000 jobs related to the Orion Township and Ultium projects; > An 18-year Renewable Energy Renaissance Zone which will require a minimum investment of $1.5 billion with the potential for up to $2.5 billion, estimated to be worth $158 million; > A Strategic Site Readiness Program grant in the amount of $66.1 million awarded to the Lansing Economic Area Partnership (LEAP) for public infrastructure and utility upgrades.

The grant legislation: https://www.legislature.mi.gov/documents/2021-2022/billanaly...

It certainly sounds like the grant portion was state tax money paid to GM. I wonder under what requirements.

The tax abatement is essentially shifting some of the tax base from corporations to individuals. Some of whom can pay those rates when they next find work.

Re: After getting $824M in state aid, GM to cut 900 jobs at Orion Assembly

#16

Post by rbetts »

legitster wrote: post #3

> Taxpayers spent $600 million to create 4,000 jobs Taxpayers spent $0. They gave up the potential to make $600 million. And that was only if Orion created the full 4,000 jobs. So they potentially only forwent ~$135 million based on the actual amount of people hired. But it's ridiculous to frame it this way. If a store gave you a coupon for $20 off your order, no one in their right mind would say the store "spent $20…

Respectfully, I do not think this is fully correct. These are in part state tax dollars being paid to industry. I’d welcome a good source to the contrary.

https://www.legislature.mi.gov/documents/2021-2022/billanaly...

Re: After getting $824M in state aid, GM to cut 900 jobs at Orion Assembly

#20

Post by legitster »

rbetts wrote: post #16
legitster wrote: post #3

> Taxpayers spent $600 million to create 4,000 jobs Taxpayers spent $0. They gave up the potential to make $600 million. And that was only if Orion created the full 4,000 jobs. So they potentially only forwent ~$135 million based on the actual amount of people hired. But it's ridiculous to frame it this way. If a store gave you a coupon for $20 off your order, no one in their right mind would say the store "spent $20…

Respectfully, I do not think this is fully correct. These are in part state tax dollars being paid to industry. I’d welcome a good source to the contrary. https://www.legislature.mi.gov/documents/2021-2022/billanaly...

Maybe! This article could be mistaken calling this a tax abatement. The original press release refers to this as a "grant" (perhaps still tax abatement with financial shenanigans).

Still, under the terms of the grant program, the state has lots of options to claw back any grant money if the recipient doesn't fulfill their requirements: https://www.michiganbusiness.org/48f6cb/globalassets/documen...

I can't find any source on what the actual financial agreements of the grant are.

UPDATE - I found the terms of the $600 million dollar grant (not tax abatement!): https://www.mackinac.org/archives/2022/GM%20Board%20Pack%20A...

> The MSF may require repayment for: (i) failure to obtain the Jobs Commitment (proportional), (ii) mass relocation of jobs out of state, and (iii) breach of representations, misappropriation, insolvency.

GM has been getting reimbursed quarterly based on real expenses they have occurred, but may have to give some or all of it back.

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