The Time is Now for Entreprencurship Renaissance Zones
By State Representative Goeff Hansen
7/20/09
During the current seven-year recession, Michigan has lost aver 300,000 jobs and has the nation’s
highest unemployment rate, currently at 15.2%. Most of these job losses have occurred in the
manufacturing sector as plants have gone out of business or moved out of state.
And while Michigan is losing established businesses, fewer and fewer new businesses are being
created to take their place. This is particularly true in West Michigan, according tu a recent report
from Grand Valley State University's Seidman College of Business. The report highlights, among
other factors, Michigan’s relatively expensive start-up costs.
For the shrinking universe of Michigan entrepreneurs that attempt to surmount the obstacles and
start a new business, 5U'% are doomed to tail within the tirst tive years, according to research
conducted by the Small Business Administ atiun.
Michigan needs to create an environment that supports new businesses, and that is why |
introduced legislation that would create Entrepreneurship Renuissance Zones for new, startup
business of 100 employees or fewer registered with the state on or after July 1, 2009. This
designation would implement a graduated tax payment plan that would zero out real property
taxes, persunal property taxes and Lhe Michigan Business Tax for the first three years and gradually
increase tax requirements over the next two.
Small businesses are the backbone of our economy, comprising 80% of the businesses In the U.S.
Instead of our state spending hundreds of millions of dollars trying to attract and retain a few large
companies, we should be encouraging thousands of entrepreneurs to innovate and use their
creativity to start new, cutting edge companies.
Apple Computer began with three people. Microsoft began with two. Google began with two. Today,
each of these companies employs tens of thousands of workers in high paying positions. My
legislation is designed to encourage that type of broad-based economic development.
Once enacted, the bill will have a positive effect on our state treasury. Why? Because these
companies do not yet exist. Indeed, the wealth that will be generated by these new companies will
lead to an increase in individual income taxes paid to the state,
This is nota permanent tax break, bul a’short-term measure designed Loid small businesses in
getting started, These new companies will become fully integrated into the state’s tax system within
five years, and the people they employ will begin paying taxes and increasing their consumer,
spending immediately.
While | am contident this legislation will have an impact on small business creation in aur state, we
ust nut forget our existing small businesses. Although this legislation does not address existing
businesses, Iam worlsing with other legislative leaders to revisc our regulatory and tax structures
to provide more support for these companies.
The time for half- measures and tinkering at the edges is over. This innovative legislation will
change the rules af the game far Michigan's entrepreneurs. By temporarily eliminating these taxes,
we will give new businesses time to establish themselves. My legislation is truly a ‘Win-Win’ for
Michigan's small business community and our state's economy, and | encourage the
Democratic House leadership to take it up as soon as possible.