In an effort to spur job creation, the Michigan Senate passed a package of bills this week enabling businesses to keep a portion of the income tax generated by new employees.
The legislation, backed by a coalition of business and economic development groups who say Michigan needs to be more competitive with neighboring states to lure business, applies to employers that meet specific job creation requirements.
Those requirements: at least 250 jobs that pay 25 percent or more than the region's average annual wage, or at least 500 jobs that pay the region's average annual wage or more. Jobs in retail, sports stadiums and casinos would be exempt.
"The Good Jobs for Michigan legislation provides a smart, sound transparent incentive tool that will help level the playing field and ensure that our state is doing everything it can to make growing new jobs our No. 1 priority and continue Michigan's comeback," Good Jobs for Michigan, a coalition backing the legislation, said in a statement.
Qualifying businesses could keep between 50 and 100 percent of employee income taxes - depending on the amount of jobs created - for a period of between five and 10 years.
The state could approve up to 15 new projects annually, and no more than $250 million in annual income tax revenue could be given up as part of the legislation.
In addition, the bills require a business's proposed expansion or location be "economically sound," and a cost-benefit analysis would have to show that the project would bring an overall positive fiscal impact to the state.
Prior to its passage this week, at least one labor group spoke out against the legislation.
"This legislation is a raw deal for Michigan. The idea that a worker would pay their income taxes directly to their employer to subsidize their own salary is just nuts," Ron Bieber, president of the Michigan AFL-CIO, said earlier this month after the package of bills was introduced.