Detroit — The capitalists and their servants have no shame when it comes to taking from the poorest and giving to the rich.
Michigan has been devastated for decades by factory closings, massive unemployment and ever-deepening poverty. Like in other states and nationally, the economic crisis of 2008 and the ensuing years was used as the pretense at all levels for increasing cuts to remaining social services while bailing out the very banks and corporations which created the capitalist economic collapse to begin with.
From 2000 to 2010, Michigan suffered its greatest job losses since the Great Depression of the 1930s. Approximately 750,000 jobs were eliminated, primarily decent-paying industrial jobs. During that same decade, because of massive unemployment and home foreclosures caused by racist, predatory loans, Detroit lost 237,000 residents. By 2009, General Motors, Chrysler and Ford — what used to be called the “Big Three” auto companies — eliminated 112,000 jobs in the state, or a whopping 52 percent of their Michigan workforce. (Report by Paul Traub, Federal Reserve Bank of Michigan, Jan. 24, 2012)
Social services in Michigan were slashed to the bone as a result of the financial crisis caused by this massive job loss. Yet from 2003 to 2013, the state government diverted to state coffers $6.2 billion in funds earmarked for revenue sharing to the cities. Detroit alone was deprived of $732 million in revenue sharing funds during those years, a huge factor in precipitating Detroit’s financial crisis and ultimate bankruptcy, with the devastating reduction in pensions for Detroit retirees that ensued. (“The Great Revenue Sharing Heist,” by Anthony Minghine. Michigan Municipal League, March 2014)
In addition, African-American cities like Detroit, Flint, Benton Harbor and Pontiac were placed under emergency management to facilitate attacks on workers’ pensions and basic services.
The corporations that caused these job losses and cuts, however, were rewarded with massive tax breaks.
How did this happen?
The state of Michigan faces a budget deficit of $325 million this year, and similar deficits for years to come, as corporations have started to cash in on huge tax credits given to them by previous Democratic Gov. Jennifer Granholm and current Republican Gov. Rick Snyder. A tax credit is a direct reduction in a corporation’s total tax bill.
Under the so-called Michigan Employment Growth Authority, corporations could claim tax credits on business taxes owed for a period of up to 20 years if they only promise to maintain 70 percent of their post-recession job levels. If a corporation was not profitable in one year, it could roll over the tax credit to the next.
Tax credits under MEGA amount to $4.9 billion, with $3.3 billion left from the Granholm years and $1.6 billion in additional credits since Snyder took office in 2010. An additional $1.7 billion in tax breaks for the corporations occurred when Snyder eliminated the single business tax in 2010.
With auto profits returning to huge levels — $2.8 billion for GM in 2014 (even after writing off $2.8 billion to pay for recalls), $3.2 billion for Ford and $1.2 billion for Fiat-Chrysler (even with writing off $1.2 billion for a one-time contribution to the United Auto Workers health care fund) — the auto companies are now lining up to begin cashing in their tax credits.
GM, Ford and Chrysler can claim refundable tax credits totaling $4.5 billion if they retain 86,000 jobs in Michigan, or 70 percent of their current workforce, through 2032. It was reported that one “unnamed” corporation, undoubtedly one of the auto companies, has claimed $224 million in tax credits for 2014, in large part creating the state’s fiscal deficit, which is being taken out of the hides of the poor. (Detroit News, Feb. 5)
General Motors and Chrysler were bailed out at a cost to taxpayers of $9.3 billion as part of federal-government-engineered bankruptcies in 2009, making it especially reprehensible that the auto companies will be cashing in on huge tax credits for years to come at the expense of desperately needed human services in Michigan.
An economic system organized rationally to provide for all human needs, including jobs or income and pensions for all, is what will bring Detroit and all of Michigan bouncing back from years of capitalist crises, greed and exploitation. That system is called socialism, where the people come first and not the corporate bloodsuckers.