LANSING, Mich. — State Sen. Ken Horn on Thursday introduced legislation that would encourage companies to conduct research and development in Michigan and invest in distressed communities.
“It took many years for us to emerge from the lost decade, and it’s something we never want to return to,” said Horn, R-Frankenmuth. “Michigan must remain competitive in the automotive industry; this is an additional tool we can add to the toolbox to make sure that happens.”
Senate Bill 378 would create a research and development tax credit that can be claimed under Michigan’s Corporate Income Tax. Businesses conducting research and development related to the design, engineering, testing or diagnostics of automated driving systems for automated motor vehicles or advanced automotive technology would be eligible for the credit.
The credit would be similar to the federal Increasing Research Activities credit and could be applied to eligible expenses that exceed 50% of a company’s average Michigan research and development expenses for the prior three years.
In 2017, the federal Tax Cuts and Jobs Act established Opportunity Zones to encourage private investment and job opportunities to revitalize communities. In keeping with that goal, the proposed credit would be available statewide at 5% but enhanced to 12% if the activity occurs within an Opportunity Zone.
“This is something other states, including some in the Midwest, are doing, and we cannot allow them to have an edge over Michigan,” Horn said. “Michigan is the home of the automobile and we need to cement Michigan’s role as a hub of advanced mobility.”
Industry leaders have reached out to Horn to show their support for his legislation.
“Michigan remains the global center of automotive ingenuity, but we continue to face increasing competition both domestically and abroad,” said Glenn Stevens, executive director of MICHauto and vice president of automotive and mobility initiatives for the Detroit Regional Chamber. “I applaud Senator Horn for his efforts to ensure that the next generation of the automobile is designed, tested, and built in Michigan.”
Mike Johnston, vice president of government affairs at the Michigan Manufacturers Association agreed that this legislation would help keep Michigan at the forefront of the auto industry.
“Michigan’s future is dependent on research and development as we compete with other states for capital investment,” said Johnston. “We appreciate Senator Horn’s leadership in ensuring Michigan will continue to be a leader in attracting new investment.”
SB 378 was referred to the Senate Committee on Economic and Small Business Development for further consideration.