Individual income tax: economic development; research and development income tax credit program; create. Creates new act. TIE BAR WITH: HB 5100'23, HB 5101'23, HB 5102'23
The bill is expected to significantly amend the landscape of Michigan's economic development strategy by incentivizing businesses, particularly in the tech sector, to ramp up their R&D efforts. By establishing a tax credit system, the state government aims to boost its competitiveness in attracting and retaining businesses that focus on innovation. The legislation outlines requirements for businesses to prove their R&D spending to qualify for the program, making it necessary for companies to engage deeply with local innovation ecosystems.
House Bill 5187 proposes the establishment of a research and development (R&D) tax credit program in Michigan. This initiative aims to encourage businesses to increase their investments in R&D activities with an emphasis on technological advancements, job creation, and providing economic benefits to the state. Eligible businesses can apply to receive tax credits based on their R&D spending, which must exceed specified thresholds. The program is administered by the state treasury department, which will handle applications and certify businesses for the credits they qualify for under a formal written agreement.
Notably, discussions around HB 5187 may revolve around concerns over how well the program targets the businesses that genuinely contribute to innovation versus those that may seek to exploit the benefits without a substantial commitment to R&D. Additionally, there could be debates regarding the adequacy of funding allocated for this program versus other budgetary needs. Critics may raise questions about how effective tax credits will be in fostering a true thriving innovation culture in Michigan, as opposed to simply bolstering tax breaks for larger companies with existing budgets for R&D.