It’s time for Entrepreneurship Renaissance Zones


    During the current seven-year recession, Michigan has lost over 300,000 jobs and has the nation’s highest unemployment rate, currently at 15.2 percent. 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 to 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 who attempt to surmount the obstacles and start a new business, 50 percent are doomed to fail within the first five years, according to research conducted by the Small Business Administration. Michigan needs to create an environment that supports new businesses, and that is why I introduced legislation that would create Entrepreneurship Renaissance 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, personal property taxes and the Michigan Business Tax for the first two years and gradually increase tax requirements over the next three.

    Small businesses are the backbone of our economy, comprising 80 percent 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.

    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 not a permanent tax break, but a short-term measure designed to aid 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 spending.

    While I am confident this legislation will have an impact on small business creation in our state, we must not forget our existing small businesses. Although this legislation does not address existing businesses, I am working with other legislative leaders to revise 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 of the game for 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 I encourage the Democratic House leadership to take it up as soon as possible.

    State Rep. Goeff Hansen, R-Hart represents the 100th District that includes Lake, Newaygo and Oceana counties.

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