Michigan Governor Rick Snyder has proposed a new budget that severely limits the amount of tax bonuses to game developers and other entertainment enterprises that want to operate out of the state. Under the new budget, tax rebates that currently cover up to 42 percent of an entertainment company’s tax expenditures would be limited to an annual cap of $25 million.
The tax incentive program was introduced in 2008 to much fanfare. Since that time nearly 130 entertainment projects have received an estimated $648 million in tax savings. The governor is targeting the tax incentive plan to make up for a $1.4 billion budget gap. He claims that lower corporate tax rates for all companies would probably be a better idea for the state and for companies in general.
Late last year a $2.7 million Ben Hogan-endorsed Wii golf game project from Pixofcator Entertainment was the first video game to qualify under the incentive program. That deal would obviously be affected by this new budget proposal. Pixofactor's Sean Hurwitz tells the Associated Press that his company won't be the only one in Michigan that will feel the repercussions of this budget proposal if it passes.
"We recently had a visit from one of the top three largest video game publishers in the world, and they're looking to bring tens of millions of dollars' worth of business to us and to Michigan," Hurwitz told the AP. "There won't be any of that work without the incentive."
Of course, proposals are not laws, and it must make it past both houses of the state before it can become the rule of the land.