Recommendation One: Michigan Manufacturing Insource Grant

Idea:

This approach to spur economic development within the State of Michigan focuses on Michigans strongest industry that is manufacturing. One of the most known facts is that Michigan needs to diversify their economy, however that does not mean we need to abandon manufacturing. It simply means we must shift our focus from manufacturing automobiles. This grant is designed to give small capital contributions to existing companies that currently manufacture outside of the United States, and bring those jobs here. It is no secret that all across Michigan are abandoned facilities suitable for minor renovations to adapt to the manufacturing process.

Eligibility:In order to qualify for this grant, you must be an existing company that currently manufactures outside of the United States. Amount of coverage:This grant is designed to cover 100% of the cost of relocating manufacturing. This includes two years lease on a building, the cost of machinery, and wage compensation for one employee necessary and knowledgeable of the machinery. Financing:This is to be determined by State Government Officials and/or MEDC Desirable Effects / Outcomes:The objective of this grant is to insource existing jobs to Michigan. Presently, there are several small businesses that are owned and operated in Michigan, but outsource production to foreign countries. This grant is designed to make the cost of domestic manufacturing more affordable.

Reference Programs: There are several existing programs that exist within MEDC that offer grant funding, or seek venture capital for companies within the state. But the qualifications for these programs do not require relocation of manufacturing.

Michigan Emerging Technologies Fund this program is offered by the Business Accelerator Fund Offers grants not exceeding $50,000 to existing businesses. This fund is not geography specific, and requires some company matched dollars. Pure Michigan Venture Match Fund This is a state fund that matches $1M to $5M investments from approved firms with a $500,000 state investment. Michigan Pre-Seed Fund 2.0 This is a $6.8 M fund that works with local entrepreneurs in technology. This includes initial investments of up to $50,000 and follow ups of up to $150,000.

Recommendation Two: The Life Science Programs

The Life Science programs, in 2010, accounted for nearly eighty thousand jobs, and invested two billion dollars solely in research and development. The life science corporations, which Michigan is home to over one hundred of them, has been a large contributor to the Michigan economy. The key to economic success is to have a circulation of money throughout the society. These firms are large contributors to circulating the monetary notes by employing people that will spend money in Michigan. Additionally, the social welfare of the Michigan constituents will increase through their astronomical contribution to the State of Michigans tax revenue. This will allow for greater investment of our infrastructure and educational system. We see this happen in Portage with Stryker and Pfizer both operating and contributing to the tax system so that the K-12 public education districts that these corporations reside in will elevate just the Portage School District.With the University of Michigan and Michigan State University attracting many students from around the nation and even globe, having these life science institutions that these universities have reputable programs in can even be a recruitment tool to slow the hemorrhaging jobs in Michigan. If this program is successful, not only will we slow the amount of life science students from leaving Michigan after receiving their education, but we will allow more money to be circulated once the individuals are hired and can contribute to the money circulation. Due to constant demand of the life sciences, the detriment of the economic shocks, much like in 2007, 1982 and 1929, will reduce the severe impact that Michigan experienced years ago. It comes down to the business cycle of economic activity. The waves of prosperity and recession that the capitalistic society inherently is linked with the economic indicators that our society has. Currently, the eastern side of Michigan is heavily invested in automotive production. The problem with this great investment is that vehicles are neither a leading nor a lagging indicator. Instead, vehicle sales lag behind when economic activity rises, and declines before the average economic activity does. This makes vehicle sales a highly volatile market to invest in. If the eastern side of Michigan can diversify the status quo of automotive production, and invest in a sector that has consistent demand, then Michigans economy should not succumb to the high volatility of automotive manufacturing. The life sciences will act as a bottom-line for where the economy is headed. To extend, automotive manufacturing is a highly specific and technical field. If the State can encourage these manufacturers to diversify their sales portfolio, then they, too, will not be burdened with then high volatility of the automotive market, and can, thus, expand their production which will hire more people that can, and will, spend more money to stimulate the economy. The life sciences are an exceptional industry to bring to Michigan: a state that has invested significantly in manufacturing automobiles, and has become burdened with the high volatility of that industry. Attracting life science programs to Michigan can, and will, by way of incentivizing them to choose Michigan instead of any other state, will minimize the risk and the volatility that the State of Michigan and the constituency accepted with the considerable investment of the automobile industry. .

Recommendation 3: Michigan Enabling Talent

Idea:

This approach to spur economic development within the State of Michigan contains place based scholarships, in contrast to community / regional based scholarships. The objective is to attract regional talent to stay and international talent to move to Michigan for their studies and stay within the state afterwards.

Structure:Place based scholarship with merit component to eligibility (3.7 GPA in Bachelors Degree required) for graduate programs within Michigan public universities. Scholarships are awarded on a first-dollar basis, meaning the scholarship awarded before other grant aid is calculated (last-dollar basis means for example, that the award is calculated to fill any gap left after federal, state, and institutional aid is awarded). By obtaining the scholarship students agree to the condition, that they have to stay within the state after obtaining their degree. The amount of time, stayed and worked in the state after graduation, defines the amount of tuition fees covered by the scholarship. The following table gives an idea how the reimbursement could be covered:Length of stay / work in Michigan after GraduationProportion of full tuition

> 1 year20 %

> 3 years50 %

> 5 years80 %

> 6 years100 %

Every student sponsored can break the contract for the scholarship and move to another state after graduating by paying the difference back to the state of Michigan. This means for example, Student A obtained the scholarship, graduated in Michigan, and after 3 years he/she wants to work in another state. He can do so by paying back the remaining 50 % of his/her tuition fee. Eligibility:Students must maintain a 3.7 GPA in their college courses and make regular progress towards a degree. Target Group: All students, regardless their nationality or residency, who have achieved outstanding academic results during their undergraduate studies, are targeted with this program. Amount of coverage:Coverage should pay up 100% in tuition. Costs like books, laboratory fees, housing and living have be covered by the students themselves, by taking public loans. Financing:Several options to finance this project should be considered. State Lottery:The State Lottery approach like in Georgia has shown an overall satisfying result. Connecting the amount sponsored throughout the program on the pre-quarter revenues of the lottery would protect the State of Michigan from making unforeseen debts. Federal investment:By enabling outstanding students to study in Michigan and obtaining them to stay within the state afterwards can increase productivity, spur growth and increase income taxes afterwards which can be used to finance a part of the program. Takeover agreements with Michigan employers:Michigan based companies can be incentivized to pay for the students tuition if they offer the respective students a, to their studies subsequent, contract of employment. The State allows participating companies to depreciate these investments as tax allowable expenses and covers the difference. Catchment area (students to be sponsored):All Students with a successful achieved Bachelors Degree are eligible for a scholarship. Catchment area secondary schools:Financial support is limited to any one of Michigans 44 public colleges or universities. Desirable Effects / Outcomes:Offer an incentive to academically superior students who can afford to attend college to remain in the state of Michigan, countering human capital flight. Furthermore attract international talent to the state of Michigan by enabling them to receive a Graduate Degree and stay afterwards in Michigan to diversify and ensure a high skilled labor force in the state.

Learning from reference programs:Experiences from similar programs have shown, that the possibility to be supported with tuition fees attract talent and that they are more likely to stay within the specific region after obtaining their degree. The alignment from the Kalamazoo Promise focuses on an eligibility based on the amount of time spent at regional high schools, which had as a result, that half of the supported students dropped their studies throughout the program. The design of the Michigan Enabling Talent program, a merit-based scholarship, where the amount covered is based on the time spent in Michigan after obtaining the Degree avoids wasting resources on students who dont have the potential to obtain a degree. Furthermore focusing on graduate students has the advantage of supporting people who are more likely to stay within their field of education and who have already shown their capability through outstanding performances in their undergraduate studies.

Reference Programs:

Place-based scholarships, or Promise programs, have emerged in communities of all types and sizes; more than 35 were created between 2006 and 2014. Four of those programs alonethe Kalamazoo Promise, Denver Scholarship Fund, Pittsburgh Promise, and El Dorado Promisehave sent over 13,000 students to college for free or close to it. The results are impressive: Following decades of decline, enrollment in the Kalamazoo Public Schools grew by 25 percent between 2005 and 2013. The availability of the Promise led to a reduction in suspensions, an increase in credits attempted, and, for African-American students, a higher GPA. Two outstanding programs (the Kalamazoo Promise and the Georgia HOPE Scholarship Program), whose experiences and structure would benefit the structuring of the Michigan approach, have been analyzed here after:

Kalamazoo Promise:

The Kalamazoo Promise describes a scholarship program that guarantees in perpetuity generous college scholarships to every student who graduates from the Kalamazoo Public Schools district (KPS). Structure: Allocation of funds is based not on merit or need but on place. Every KPS graduate who has been enrolled in and resided in the district since kindergarten receives a scholarship covering 100 percent of tuition and mandatory fees at in- state, postsecondary institutions. Scholarships are awarded on a first-dollar basis, meaning that the scholarship amount is calculated before a students other grant aid. Eligibility: Students must maintain a 2.0 GPA in their college courses and make regular progress toward a degree. Target Group: Students, who have be enrolled and resided in the district. Amount of coverage:Amount of coverage depends on the amount of years, which have been spent at KPS high schools, as can be seen below:Length of attendanceProportion of full tuition

K12100%

11295%

21295%

31295%

41290%

51285%

61280%

71275%

81270%

91265%

1012None

1112None

12None

Financing: A group of anonymous donors pay up to 100% of tuition. As of summer 2010, the program had paid out $18 million in tuition for about 2.000 high school graduates of Kalamazoos two high schools and three alternative schools. Catchment area (students to be sponsored): All Students are eligible for a scholarship. Catchment area secondary schools: For the graduating classes of 2006 to 2014, use of the scholarship was limited to any one of Michigans 44 public colleges or universities. For the classof 2015 and beyond, 15 private liberal arts colleges, each a member of the Michigan Colleges Alliance, are also included as postsecondary options. Effects / Outcomes: Enrollment in the Kalamazoo Public Schools grew by 25 percent between 2005 and 2013. The availability of the Promise led to a reduction in suspensions, an increase in credits attempted, and, for African-American students, a higher GPA. Furthermore some positive effects for the local economy (almost two-thirds of scholarship recipients have chosen to attend the local university or community college), others less so (the program has had no discernible impact on the housing market). In addition to this a nation wide adaption of the Kalamazoo approach was seen. Criticism: As of 2011 half of the students who have started programs have dropped out before finishing degrees or certificates.

Georgia's HOPE Scholarship Program

The HOPE Program (Helping Outstanding Pupils Educationally) created in 1993 under the supervision of Georgia Governor Zell Miller, is Georgia's unique scholarship and grant program that rewards students with financial assistance in degree, diploma, and certificate programs at eligible Georgia public and private colleges and universities, and public technical colleges. Georgia's HOPE Scholarship is available to Georgia residents who have demonstrated academic achievement. The scholarship provides money to assist students with their educational costs of attending a HOPE eligible postsecondary institution located in Georgia.

Structure:The program is entirely merit-based, meaning that students' ability to pay for their education is not a factor in determining if they receive it. Previously, traditional-college-age students whose family income exceeded $100,000 per year were disqualified from the program. Eligibility:HOPE specific eligibility:To receive HOPE Scholarship funding, students must:1. Meet one of the following academic requirements: Graduate from a HOPE eligible high school / home study program with a 3.0 using the HOPE grade point average calculation. Graduate from an ineligible high school, complete an ineligible home study program, or earn a GED, on or after July 1, 2014 and score in the national composite 80th percentile or higher on the SAT or ACT prior to graduation, home study completion date or GED test date. Graduate from an ineligible high school or complete an ineligible home study program, and then earn a 3.0 grade point average on 30 semester hours or 45 quarter hours of college degree-level coursework. This option allows for payment of the first 30 semester hours or 45 quarter hours after they are taken. Earn a 3.0 grade point average at the college level on degree coursework after attempting 30, 60, or 90 semester hours or 45, 90, or 135 quarter hours, regardless of high school graduation status. 2. Be enrolled as a degree-seeking student at a public or private HOPE eligible college and university in Georgia.3. Meet additional rigor requirements, beginning with students graduating from high school on or after May 1, 2015., meaning that specific classes have to be attended before.State program eligibility:1. Meet U.S. citizenship or eligible non-citizen requirements;2. Be a legal resident of Georgia;3. Be registered with Selective Service, if required;4. Maintain satisfactory academic progress as defined by the college;5. Not be in default or owe a refund due on a student financial aid program;6. Be in compliance with the Georgia Drug-Free Postsecondary Education Act of 1990. Target Group: Georgia residents only (see eligibility for further insights). Amount of coverage:The money provided to HOPE Scholars varies and depends on the type of institution as well as the student's specific enrollment. But generally it aims to cover 100% of tuition (books and mandatory fees have been eliminated) and is capped at 127 credit hours. Financing: HOPE is funded entirely by revenue from the Georgia Lottery and is administered by the Georgia Student Finance Commission (GSFC). As of 2006, more than $3 billion in scholarships had been awarded to more than 900,000 Georgia students. In the fiscal year 2010 2011 238,489 HOPE recipients have received $679.0 million. Catchment area (students to be sponsored): Georgia residents who have demonstrated academic achievement. Catchment area secondary schools:The scholarship covers public colleges, universities and technical colleges, as well as private colleges and universities throughout Georgia. Effects / Outcomes:The program has shown an essential influence to counter the brain drain phenomenon Georgia was experiencing prior to the program and also successful enables academically superior student who would not otherwise be able to afford college the opportunity to receive higher education. Criticism:The seven year expiration of eligibility date, saying that only students applying within the first seven years after obtaining their high school degree are eligible for the scholarship, has been criticized for discriminating against non-traditional students. But on the other hand it represents and important component to focus on talented and ambitious students and limitations have to be defined by providing such a program.

PromiseNet2015:Since the announcement of the Kalamazoo Promise in 2005, dozens of communities around the nation have created their own place-based scholarship programs.

Promise communities are those that seek to transform themselves by making a long-term investment in education through place-based scholarships. While these programs vary in their structure, they all seek to expand access to and success in higher education, deepen the college-going culture in K-12 systems, and support local economic development.

The PromiseNet2015 could be used for a collaboration to learn from their experiences and avoid mistakes, which have been already done. Their knowledge and expertise would be fruitful by using economies of scale to adapt knowledge from community programs to set up a nation wide program.

Recommendation 4: College Job Database

Idea:

This approach to spur economic development within the State of Michigan contains matching students skills with relevant work opportunities throughout their studies. Work opportunities include part-time jobs, summer jobs as well as internships. This will aid students of all different majors in gaining job experience which will help them in the long run by graduating from college or community college while gaining two to three years of relevant work experience. Furthermore with a majority of problems for students being based on costs or available funds to pay for college this will help them gain a decent paying job while either being in school or doing it over spring and summer. In addition, a lot of students are from Michigan but are moving within the state to their home city during spring and summer term. This would enable them to find both, a relevant position in the region of their college as well as one in the region of their home city, by using one source.

This database should be established tosupport the role of all public colleges and universities in Michigan as an economic and workforce developer. Next to the above mentioned reasons it can provide a channel for communicating targeted opportunities such as:grant funding to support workforce training,partnerships and training consortia; open positions on college advisory boards to strengthen academic and economic relationships. Besides, the database could give ongoing learning, which skills are needed in which fields and with this insights students can be even better prepared for their careers.

The objective is to offer students relevant work experience, get employers in contact with potential talents and finally create lasting relationships between both to foster high skilled and trained graduates to stay within these relationships after graduation.

Patronage:Department of education and business joint venture will create and oversee this database. Structure of the database:The database can be created from open source or closed source programs. Open source platforms would be Pivital Greenplum, MySQL, and Hadoop. These will be what creates the database and holds the information. By closed source we would end up contracting out to a company to be the private sector entity to watch over and manage the database. For data entry open source we could use sqoop, oozie, and flume. A more sophisticated approach for closed source data entry would be Teradata MySQL or Oracle. The most professional data entry program definitely is currently Wherescape RED. Eligibility:In order to get access to this database, students must be enrolled at one of Michigans 44 public colleges or universities. Employers have to be based in Michigan to be eligible for this service. Financing:Several options to finance this project should be considered. State financed:The database could be state financed, as it would take part of education spending. Employer Financed:As this would be a source where employers can more easily create lasting relationships with local students, they would save money by attracting talent early and hiring them after graduation. Therefore a fee related to the amount of successful placed job offers could be charged. Requirements: Platform IT Staff Compliance with privacy legislation Desirable Effects / Outcomes:The objective of this database is to insource existing jobs with students from Michigan. In addition enabling employers to find the right fit within local students favor companies to hire Michigan students as human resources processes to fill the relevant positions can be designed more efficiently. And finally it would help to close the skill faster through the gained, relevant experience. Reference Programs:So far, there are no similar programs.

Recommendation Five: Renewable Energy for ResidentsIdea: Create a guide for residents of Michigan to purchase small renewable energy systems. We want to give resident the ability to reduce electricity bills. The renewable energy systems we wish to target are small solar and wind systems. With reducing residents electricity bills we hope to open up their income and create a larger ability to spend.

Structure: Going through the incentives granted from the Federal and State governments. Also looking at our incentives from electric companies in Michigan. We can combine all three to develop the lowest cost for renewable systems.Federal Incentives: Production Tax CreditUnder the IRC Tax code the federal government will give an income tax credit of 2.2 cents per kW of all qualified electric producing renewable energy. This can be solar, wind, hydro, small irrigation, geothermal, open and closed loop biomass production. This credit can be reduced for those who also receive tax-exempt bonds, grants, and subsidized energy financing.Residential Renewable Energy Tax CreditIndividual taxpayers are eligible for a personal tax credit equal to 30 percent of the cost of qualified solar-electric, solar hot water, small wind energy, and geothermal heat pump property. The ARRA extended the applicability of this credit until December 31, 2016, and eliminated the previous cap of $2,000.Federal GrantsThree major grant programs are available to Native American tribes and rural communities. The Tribal Energy Grant Program of the Department of Energy (DOE) provides financial and technical assistance to tribes for the development of renewable energy projects and energy-efficiency programs. The United States Department of Agricultures Rural Energy for America Program (REAP) provides grants and loan guarantees of up to 25 percent of project cost for the development of renewable energy systems by agricultural producers and small rural businesses. Grants are also available to state and local governments, tribal governments, rural electric co-ops, etc. The USDAs High Energy Cost Grant Program provides grants to individuals; businesses; and state, local, and tribal governments to improve energy systems in rural communities that have high energy costs (275 percent of national average). Innumerable technical and research grants are also available through the DOE and other government agencies, amounting to potentially billions in subsidies.State Incentives:Net Metering ProgramResidential net meters tend to be under or up to 20 kW. The house will be billed for the net usage of electricity.Michigan Saves Michigan Saves is a non-profit that offers financing options for energy efficiency improvements throughout Michigan. The Home Energy Loan Program was started with seed funding from the Michigan Public Service Commission. Loans are available for owner-occupied, single-family homes with 1-4 units (primary or secondary residences) for energy efficiency improvements. Multi-unit homes are only eligible if the owner resides in one of the units. In addition to energy efficiency improvements, solar thermal, solar water heaters, and PV systems between 1 kW and 20 kW in size are eligible for loans. Loan applications can be completed over the phone or internet. Applicants must have a credit score of 640 or higher, and have a debt-to-income ratio of less than 50%. Term lengths are flexible (between 12 and 120 months) and depend on the loan amount and the borrower's preference. Michigan Saves also offers a Home Mortgage Program, which allows homeowners to finance energy-savings improvements through their mortgage when they are buying a home or refinancing.Company Incentives DTE Solar Current Programat a rate of $2.40 per watt DC. Systems must be designed not to exceed on-site energy needs. Tacked onto the rebate is a production incentive that pays $0.11 per kilowatt-hour (kWh) for renewable energy credits produced by the system over 20 years. Rebates are up-front and paid upon completion of system installation. Interestingly, existing systems installed between Jan. 1, 2005 and Jan. 1, 2009 are also eligible for rebates, although at a reduced rate. Owners of existing systems must have a valid Detroit Edison Parallel Operating Agreement in order to apply for the rebate. Rebates for existing systems are doled out as follows. Consumers Energy - Photovoltaic Purchase TariffResidential solar PV systems were eligible for up to a whopping $0.65/kWh production incentive. Unfortunately, to qualify for that tariff level, the system had to be in place by May 1, 2010, which is now past. However, a still-lucrative purchase tariff of $0.525/kWh of excess solar energy produced is still available. Non-residential systems are eligible for a $0.375/kWh rate. System owners must pay a monthly charge to the utility to cover metering costs.While creating an easy way for residents of Michigan to purchase renewable energy systems. We want them to purchase Michigan made system. Looking into both solar and wind we have a multitude of them in Michigan. If we could create better ways for these companies to interact with each other. This would could potentially allow for residents to purchase systems for less. While expanding these companies through repeat purchases in Michigan.When looking at hydroelectricity we have small problems with residential purchases. Houses may have a river or stream on them yet the current may not be able to create an efficient amount of electricity for the owner. To fix this we can move hydroelectricity to a local government solution. By doing this we still run into a problem with attempting to keep using the tourist income for some local businesses. The idea would be to use underwater turbines. This would let us create electricity for the local population. As well as keep the area looking the same as it did before.

Recommendation Six: Investing in Trade Skills

The Federal Student Aid portfolio summary has been rising aggressively. The difference between the total outstanding dollars between 2007 and the first quarter of 2015 is $624.1 billion: more than twice the amount of outstanding dollars in 2007. There is also nearly thirteen million more recipients of federal aid in either the form of direct loans, the Federal Family Education Loans (FFEL) and the Perkins Loans. The amount of direct loans recipients is more than fourfold the amount in 2007 as compared to the first quarter of 2015. Since 2009, the number of persons in the State of Michigan of the age of twenty four or higher has rose from 24.5% to 26.0%, while the total population of Michigan has been declining. This saturates the market of persons pursuing higher education. Social scientists consider the cause of this occurrence to be herd behavior.

Herd behavior is the phenomenon where people follow the choices made by other individuals. Much like when a deer becomes anxious due to a sound, for example, and then runs away only to be followed by the herd. This happens due to the deer being risk-averse. People want to make the right choice, and to be forced to make decisions even though they do not have the ability to know the future, a decision still has to be made. The popular choice of attending colleges and universities is due to herd behavior. The difference between those who earn their income by practicing trade skills when compared with those of professional degrees is minimal. The inference that can be made is that individuals find that attending higher education is a more risk-averse decisions when trying to find employment.

Similarly with products and services that are subject to the concept of supply and demand, when herds of individuals begin following the same decision about higher education, the demand of the saturated job market decreases, along with the wages inherently, which makes it more difficult to start the individuals career and earn as much as the highly demanded jobs. This is how market bubbles are created: the over investment of markets. The outcome of bubbles is economic crashes. This is what the world experienced in December of 2007. The question, How do we resolve this issue? then arises.

The answer to this question, the government must encourage the investment of trade skills as a career path. Trade skills give people the opportunity to earn money while earning an education in the respective field, as well as only needing to be in school for approximately two years, as opposed to the bachelors degree which takes between four and five years to earn (the associates degree is excluded due to the majority of employers desiring their employees to have bachelors degrees).

The investment ought to be made in economically struggling areas, such as Detroit, Flint, Saginaw, and Kalamazoo for students in publicly funded schools. Students in these urban and metropolitan areas are not provided competitive resources in the K-12 experience. Providing liberal arts education is still essential to produce autonomous individuals who can make choices at their own free will, but also giving them the necessary skills to be competitive in society for attaining an income.

Implementing either an afterschool program for students, potentially as early as seventh to ninth grade. The other option is to have an alternative school that they can learn the basics in fundamental trade skills, for example, carpentry, plumbing and others. Once the students are grounded in basic trade skills, once reaching a grade level that the State of Michigan finds appropriate, the students can then transition into more difficult trade skills. Through this initiative, students in these programs will be able to earn certificates that will allow graduates to be hired after they graduate.

The program will provide students with unique skills that other areas of the state that are not under resourced so that they may be competitive and earn an income after they graduate, instead of the alternatives of either entering the workforce with the education of the status quo, or the other option of pursuing higher education.

The danger of entering the workforce with the education of the status quo is that the individuals will be outcompeted with those who have certificates and degrees. Furthermore, the harms of pursuing higher education is that the urban metropolitan areas are under resourced, and when researching the differences between these areas and suburban communities, the graduates have great difficulty when transitioning into higher education. The Kalamazoo Promise, along with other programs, have proven this.

The key to ensuring the success of this program is to have a strategic alliance between trade skills unions and the State of Michigan. The reason why this alliance will excel the efficaciousness of the initiative comes down to the investing actors involved.

Trade unions exist from the leverage they gain from their membership. To gain leverage, unions seek greater numbers of members. The appeal of having more members ought to arrest the attention of the unions. To capitalize on gathering more leverage in collective bargaining, unions will see the value in investing in the labor and capital that is necessary to have the initiative be success.

Additionally, the State of Michigan is obliged to fulfill the social contract between the constituents and the government. The State has a fiduciary obligation to provide the constituents with the means to have social mobility, instead of be stuck in cyclical poverty. This initiative fulfills the obligation.

Furthermore, the investing actors will also use collective resources to bring big businesses to Michigan. The leverage of these actors, along with the capability of the newly trained workforce that the State of Michigan and the trade unions groomed will forever revitalize the future economic state of the State of Michigan.

Recommendation Seven: Sunsetting

Idea: The idea for recommendation six is to sunset our current tax and incentive laws. The purpose behind this is to create Michigan to become a more business friendly state. We would like to model this new system from states like Wyoming and other states that have taken out income taxes. These income tax drops are for both corporations and personal incomes. By doing this we would have to switch around sales tax and other things in order to make up for the loss in income tax.

Michigan Sales TaxCurrently at 6% general sales tax on consumers this is above the national median of 5.95%Gas Tax: Currently at 48.66 cents per gallon (Including all taxes)Diesel Tax: Currently at 58.38 cents per gallon (including all taxes)Cigarette Tax: Currently at $2 per pack of 20Personal Income TaxFlat rate of 4.25% of federal adjusted gross income with modificationsRetirement Tax: social security, military, federal, and state/local government pensions are exempt Property TaxesProperty in Michigan is assessed at 50% its true cash value for taxationCorporate Income Tax:Currently at 6% flat rate it is the 19th lowest among the states that have a corporate income tax

Sources: http://taxfoundation.org/state-tax-climate/michigan http://www.retirementliving.com/taxes-by-state http://www.usgovernmentrevenue.com/year_revenue_2015MIbs_16bs1n_104060#usgs302

Example StatesWyoming:Sales Tax:The state sales tax is 4%. Wyoming also gives its counties the option of adding up to 4% in additional taxes. There is also a country lodging tax that ranges from 2% to 4% this is added to the other sales taxes. (Sales tax has an exemption on prescriptions and food for home consumption)Gas Tax: currently 42.2 cents per gallon (including all taxes)Diesel Tax: currently 48.4 cents per gallon (Including all taxes)Cigarette Tax: Currently 60 cents per pack of 20Personal Income TaxesNo state personal income taxRetirement income is not taxed including those from other statesProperty TaxesProperty tax rates are set by a multitude of political entities with the legal power to levy taxes. These include counties, school districts, cities, and towns. Any special taxing districts, such as water and sewer districts, also have the ability to levy taxes. Once a tax rate and budget is adopted a tax rate cannot be appealed. But any obvious factual errors may still be corrected by the county. The tax notice states the amount you pay to each taxing entity.Wyoming also is a Fractional Assessment state. This means that Wyoming`s property tax applies to a fraction of the full market value of the property. The fraction taxed is the property`s assessed value. A majority of properties the fraction rate is 9.5%. Although a $100,000 house has $90,500 exempt from taxes citizens are legally protected from counties and municipalities increasing tax rates above .8%Corporate Income Tax:Wyoming has no Corporate Income Tax. This makes it one of the six that do not have corporate income tax.

Sources: http://taxfoundation.org/state-tax-climate/wyoming http://www.retirementliving.com/taxes-by-state http://www.usgovernmentrevenue.com/year_revenue_2015WYbs_16bs1n_104060#usgs302 TexasSales TaxStates sales tax is 6.25% local options can raise taxes up to 8.25%. There is a non-prepared food, prescription, and non-prescription drug exempt on taxes.Gas Tax: Currently 38.4 cents per gallon (including all taxes)Diesel Tax: Currently 44.4 cents per gallon (including all taxes)Cigarette Tax: $1.41 per pack of 20Personal Income TaxThere is no state personal income taxRetirement income is not taxedRetired military pay is not taxedProperty TaxThe property tax is imposed by the local taxing units. For home owners that are 65 and over are able to receive $10,000 of property`s assessed value expemt from school taxes. Also 3,000 is exempt from other local taxes. When a home owner over 65 qualifies for the school tax cut they also receive a price ceiling for that home`s school taxes. If the homeowner improves the house (not including normal repairs and maintenance), the tax ceiling is adjusted for the new improvements on the houseCorporate Income Tax:Texas does not have a corporate income tax. Adding it to one of the six that do not levy a corporate income tax.

Sources: http://taxfoundation.org/state-tax-climate/texas http://www.retirementliving.com/taxes-by-state http://www.usgovernmentrevenue.com/year_revenue_2015MIbs_16bs1n_104060

FloridaSales Tax Currently at 6% local taxes can increase sales tax by .65%. This is above the national average of 5.95%Gas Tax: Currently at 36.4 cents per gallonCigarette Tax: 1.34 per pack of 20Personal Income TaxFlorida does not have a personal income taxProperty TaxAll property is taxable to the fullest on its valuation.Corporate Income Tax Currently at 5.5% this is a flat rate for all companies

Sources : http://taxfoundation.org/state-tax-climate/florida http://www.retirementliving.com/taxes-by-state http://www.usgovernmentrevenue.com/year_revenue_2015MIbs_16bs1n_104060

Illinois

At a glance:

Gross Domestic Product: Illinois GDP in 2013 was $671.41 billion. The real GDP in Illinois grew by 0.9 percent in 2013, below the national average growth rate of 1.8 percent. Since 2009, annual Illinois GDP growth has averaged 1.3 percent, compared with a national average annual growth rate of 2.0 percent. Unemployment:The unemployment rate in Illinois was 6.0 percent in March 2015, holding constant from February. The rate was 0.5 percentage point above the national rate of 5.5 percent. Unemployment is down 1.7 percentage points from one year earlier and is 5.2 percentage points below its recent peak of 11.2 percent in January 2010. There were 391,200 Illinois residents unemployed in March 2015.

Exports:In Illinois, goods exports totaled $4.9 billion in February and $64.7 billion over the past year, up 2.2 percent from the 12 months ending in February 2014 (inflation-adjusted). Exports over the past 12 months are up 45.5 percent from their level in 2009 (inflation-adjusted).

Median Household Income:The Median Household Income in Illinois was $57,200 ($59,000 in 2007 (pre-recession)), compared to $51,900 in the United States ($56,400 in 2007).

Source: http://www.jec.senate.gov/public/index.cfm?p=statebystatereport

According to the 2015 ALEC-Laffer State Economic Competitive Index, Illinois ranks 46th on the economic performance rank (1 = Best / 50 = Worst). This backward-looking measure is based on the states performance in the following three important performance variables, which are highly influenced by state policy:

1. State Gross Domestic Product

The Cumulative Growth between 2003 and 2013 adds up to 35.6%, ranking Illinois in 2014 in a nationwide comparison on rank 43. Michigan in contrast, has a Cumulative Growth between 2003 and 2013 of 14.4%. Michigan however slightly outperforms Illinois since 2010. The slower recovery in Illinois compared to Michigan can be explained due to the effort of the federal government to save the auto industry. Illinois with its more diverse economy, compared to Michigan, which is normally considered to be a good protection against economic shocks, was therefore not so receptive for federal economic programs and the more diverse economy (in detail in the part economic diversity) paradoxically seems to be the reason for Illinois slower recovery.

Illinois 1Michigan 1

2. Absolut Domestic Migration

Domestic Migration includes travel / movement for educational, economic and, political reasons. It is a valuable indicator reflecting the actual state and the individuals future perspectives within a specific region or in this case a whole state. The absolute domestic migration between 2004 and 2013 is slightly higher in Illinois than in Michigan. Comparing the absolute domestic migration proportional to the net amount of residents (Illinois 12.88 million & Michigan 9.91 million by the end of 2014), the percentage was higher in Michigan. Nevertheless both states belong to the worst-performing states in a nationwide comparison with rank 47 for Michigan and rank 48 for Illinois.

Illinois 2Michigan 2

3. Non-Farm Payroll Employment

The U.S. Bureau of Labor Statistics reports the Non-Farm Payroll Employment statistics on a monthly basis. The statistics represent the total number of paid U.S. workers of any business, excluding private household employees, nonprofit organization employees and farm employees. Over time, these data have proven to be an important indicator of economic conditions because they move closely in line with the overall economy and enable to predict economic trends. Michigan ranks last of all states with a Cumulative Growth between 2003 and 2014 of -6.4%. However, since 2010 Michigan performs better than Illinois, as the growth is impaired by the hard decline between 2008 and 2009.

Michigan 3Illinois 3

On the economic outlook rank, Illinois achieves the 40th place (Michigan ranks 24th). This forward-looking forecast is based on the states standing (equal-weighted average) in the 15 important state policy variables shown below. Data reflect state and local rates and revenues and any effect of federal deductibility:

Significant differences (in advantage for Illinois) are shown in the top marginal personal income tax rate, the top marginal corporate income tax rate as well as in the sales tax burden in Illinois compared to Michigan. The tax structure is analyzed in detail hereafter. All 15 variables are presented in the charts below:

Illinois 4

Michigan 4

Source: http://www.alec.org/publications/rich-states-poor-states/

Taxes

State business tax climate index of the United States 2014

The Tax Foundations annual State Business Tax Climate Index looks at levels of taxation and complexity of compliance to compare the states on how "business friendly" in terms of taxes each state is compared to the others. The scale for each factor considered is one to ten, with ten being the "best". Rankings are based on unrounded scores and reflect those of the source. The most competitive tax systems are typically found in states that raise sufficient tax revenue witheconomically neutral and simple tax systems. The least competitive are typicallyfound in states with complex, multi-rate corporate and individual tax codes; above-average sales tax rates that exempt few business-to-business transactions; high state tax collections; and few institutional restraints on the level oftaxation or spending.

Ranking on Five Component Taxes

Overall Index RankCorporate TaxIndividual Income TaxSales TaxUnemployment Insurance TaxProperty Tax

Illinois314711343844

Michigan13101474727

Source: http://taxfoundation.org/article/2015-state-business-tax-climate-index

Corporate Income Tax The Illinois rate of 7.75% is the sum of a corporate income tax rate of 5.25% plus a replacement tax of 2.5%. Flat rate (> $0)Individual Income Tax 3.75% Flat Rate Personal exemptions: Single: $ 2,000 Married: $ 4,000 Dependents. $ 2,000 Federal Income Tax Deductible: noSales Tax 6.25% (12th of 50) With local taxes, the total sales tax rate is between 6.25% and 10.00%. Combined Rate 8.19 % (With average local taxe rate of 1.94%). (10th of 50)

Unemployment Insurance Tax

-> Fund builder of % 0.55 has to be added to each category.

Property Tax Percentage Of Property Value: %1.73 (6th of 50) Percentage Of Income: % 5.11 (5th of 50) Median Property Tax: $3.507 (7th of 50)

Programs

The Illinois Department of Commerce and Economic Opportunity offers several programs to support different groups of potential economic drivers. On their special homepage (https://www.illinois.gov/dceo/SmallBizAssistance/Pages/default.aspx) they guide different stakeholders through their different offers and make it easier for the individual to find relevant support. Among other, more specific categories, there are three main groups: Entrepreneurship & Small Business Assistance:Entrepreneurs and small business owners can find direct support concerning issues like financing options, incubators & workspace, laws & regulation and even one on one business advice. Tourism GrantsThe Illinois Office of Tourism administers and monitors five local tourism-funding programs. The goal of each program is to generate increased hotel/motel occupancy and travel throughout the state. Technology Grants and Programs

Tax Incentives and Assistance Programs:

Furthermore, Illinois has put several incentive and assistance programs in place to either bring businesses to Illinois or help local businesses. Below can be found a sample of the most promising programs in place.

A) Bringing Business to Illinois: Economic Development Tax CreditsAvailable for the creation or retention of full-time jobs, based on capital investments and the number of jobs created or retained Job Training GrantsAvailable to businesses to upgrade or improve job-related skills of full-time employees based on investment amount and number of jobs created or retained Enterprise Zones and High Impact Business Available to businesses investing in designated areas and to encourage economic development and job creation through tax credit incentives and exemptions LocationOne Searchable databases for available commercial and industrial sites, locations and buildings for businesses looking to expand throughout Illinois

B) Helping Businesses Advantage Illinois Available to Illinois businesses and entrepreneurs to provide access to capital to start new companies and expand existing businesses Illinois Angel Investment Credit Available to investors to provide working capital for early stage and innovation-driven companies Illinois Small Business Jobs Creation Tax Credit Available to small business owners and not for profits to provide tax credits for job creation at Illinois small businesses Large Business Development Grants Available for land and building acquisition, construction, machinery and equipment based on capital investment and jobs created or retained Business Development Public Infrastructure Grants Available to local governments for expanding or relocating businesses investing and creating jobs in their communities Community Development Grants Available to local governments in underserved communities to assist with private job creation and public infrastructure for economic development projects

Source: https://www.illinois.gov/dceo/ExpandRelocate/Incentives/Pages/default.aspx

Economic Diversity

A comprehensive analysis always reflects data from different perspectives. To measure the economic diversity of Illinois, at first the industry has been divided in their biggest employment industries:

Economic Diversity according to biggest employment industries in May 2014:

IndustryEmploymentRatio

Total:5,765,880100%

Transportation and logistics1,160,00020.1%

Professional services905,00015.7%

Manufacturing575,00010%

Financial services370,0006.5%

Source: http://www.bls.gov/oes/current/oes_il.htm#00-0000

Hereafter the economic diversity is analyzed according to the GDP by industry.

Economic diversity according to the GDP by industry (total GDP (2013): $671.41 billion):

Source: http://www.statista.com/statistics/304912/illinois-real-gdp-by-industry/

The two perspectives show their correlation. Whereas the financial services sector counts for 6.5% of the industry as far as employment is concerned, it makes up for 21.73% if the real added value to the GDP is considered. This shows that if the objective of economic diversity to protect Michigan from economic shocks is pursued, the real value added to the GDP of the targeted industry is more important to outbalance economic shocks.

Energy

Generation:Fossil fuels are non-renewable, that is, they draw on finite resources that will eventually dwindle, becoming too expensive or too environmentally damaging to retrieve. In contrast, the many types of renewable energy resources-such as wind and solar energy-are constantly replenished and will never run out. To predict economic development und sustainable economic growth, renewable energy sources play a significant role. Illinois ranked 3 out of the 12 Midwestern States in 2011 with a capacity of 2.940 megawatts in total including hydro, out of which 2.742 are generated by wind. Michigan in contrast ranked 9 out of 12 with 1.229 megawatts in total, including 377 megawatts produced through wind power (Most up-to-date data on a comparison for the Midwestern States).

Source: http://www.statista.com/statistics/186728/us-wind-and-total-renewable-electricity-capacity-in-the-midwest/

However Illinois passed a state policy to make renewable energy as high as 25% of overall energy by compliance year 2025-2026. This objective shows results as by October 2013 Illinois ranked already second in the Midwest for installed renewable power capacities and third in the region for biofuels production capacity. The renewable portfolio standard includes carve-outs for solar energy distributed generation, foster a supportive environment for its citizens and the commercial, industrial, and utility sector to invest in renewable energy. To achieve this initiative several tax incentives and grants have been introduced: Tax incentives: Sales tax exceptions have been created as a tax incentive if the following requirements hold true: For businesses building a new wind power facility in an Enterprise Zone. Exemption from the full state sales tax and any additional local state sales taxes for building materials incorporated into the facility. Must involve a minimum investment of $12m and create 500 full-time jobs.

Furthermore a public benefit fund has been created which supports renewables through grants, loans and other incentives. The total fund is approx. $100m between 1998-2015.The following rebates and grants are granted according to the renewable portfolio standard: Solar and Wind Energy Rebate Program: Maximum incentive residential: $10,000; commercial: $20,000; nonprofits and government sector: $30,000 System size PV: 1 kW; solar thermal: 0.5 therms/day or 60 sq. ft.; wind: 1-100 kW Community Solar and Wind Grant Program: Businesses: up to 30% of project costs for solar thermal and wind and 25% for solar PV; government and nonprofits: 40% of project costs Maximum incentive of $250,000 Biofuels Production Facility Grants: Construction or expansion of biodiesel or ethanol facilities The lesser of 10% of the total construction costs of the facility or $4m Alternative Fuel Vehicle (AFV) and Alternative Fuel Rebates: Rebate for 80%, up to $4,000, of the incremental cost of purchasing an AFV 80%, up to $4,000, of the cost of converting a vehicle to an AFV, and the incremental cost of purchasing alternative fuels

Source: www.acore.org/files/pdfs/states/Illinois.pdf

Miscellaneous:

After the Great Recession the Illinois Department of Commerce and Economic Opportunity has published the Illinois economic development plan in July 2014. Illinoiss essential part of its strategy is to promote clusters to drive economic development: Promotion of a broad-based, bottom-up approach that enables individual regions to identify the industries that they are well positioned to attract and support. As a way to capitalize on existing assets and opportunities, many areas around the country are incorporating a cluster-based strategy into economic development practices. By building on these foundational components of a dynamic economy and nurturing clusters, states can not only help existing businesses grow but also attract more business to the state. (Source: Illinois economic development plan, p.6)

Therefore the following seven industry clusters have been defined:1. Biomedical/ biotechnical 2. Advanced materials 3. Transportation and logistics 4. Information technology and telecommunications 5. Machinery and fabricated metal products manufacturing 6. Agribusiness,food processing, and technology 7. Clean energy

Using those industry clusters as their strengths and the foundation of Illinoiss economy, seven correlated initiatives have been developed to spur economic growth:Seven initiatives to spur economic development in Illinois 1. Strengthen the states ongoing business attraction, retention, and support initiatives a. Expand Illinois marketing efforts b. Pursue a comprehensive certification program for Illinois industrial sites c. Reform EDGE d. Enhance business retention and expansion efforts e. Streamline the states business regulations

2. Promote economic development on a regional level a. Prioritize bottom-up planning and action b. Leverage growth in key industry clusters c. Pursue a low-cost, sustainable energy and natural resource economy d. Streamline the transfer of state surplus properties e. Incentivize regions to secure federal funds

3. Develop an increasingly competitive workforcea. Establish a revenue-neutral job training tax credit b. Launch a year-round youth job training program c. Support skilled trades apprenticeships d. Expand the Job Training for Economic Development (JTED) program e. Increase support for youth scholarship and conservation corps programs f. Extend the Illinois Pathways program 4. Increase fairness and opportunitya. Focus more resources on the states most distressed communities b. Double the states Earned Income Tax Credit c. Increase the minimum wage to $10 an hour d. Continue and expand veteran job training and placement

5. Make Illinois a top destination for entrepreneurs a. Reduce the limited liability company (LLC) fee for small businesses b. Promote export growth among small and midsize enterprises (SMEs) c. Establish regional business plan competitions d. Focus more state resources on second-stage small businesses e. Promote entrepreneurship as a life skill f. Keep our best and brightest talent in Illinois

6. Implement a comprehensive, statewide strategy to drive innovation a. Establish a technology transfer fund b. Reduce costs for university-based tech start-ups c. Increase state and industry collaboration with research institutions d. Support clean tech companies through the Illinois Clean Energy Revolving Fund e. Build the infrastructure for innovation

7. Modernize and revitalize our infrastructure a. Secure full funding for the CREATE program b. Perform regular maintenance on key transportation infrastructure c. Expand the Illinois Clean Water Initiative (ICWI) d. Undertake large-scale, next- generation infrastructure projects e. Modernize Illinois aging locks and dams f. Implement a statewide Smart City program g. Increase access to broadband Each initiative has its clearly defined five-year economic growth targets. Those targets have been specified by explicit figures like e.g.: Enable Illinois universities to launch 1,500 new start-ups over the next five years or increase the percentage of the population with a degree or certificate to 51% by 2019.

Indiana At a Glance Gross Domestic ProductIndiana real GDP in 2013 was $294.21 Billion. The real GDP in Indiana grew by 2.1% in 2013. This was over the national average of 1.8%. Since 2009 the annual GDP of Indiana has grown by an average of 2.9%. This also is over the annual national GDP growth average which is only 2.0%.UnemploymentThe unemployment rate in Indiana was 5.8 percent in March 2015, down 0.1 percentage point from February. The rate was 0.3 percentage point above the national rate of 5.5 percent. Unemployment is down 0.2 percentage point from one year earlier and is 5.1 percentage points below its recent peak of 10.9 percent in February 2010. There were 188,900 Indiana residents unemployed in March 2015.ExportsIn Indiana, goods exports totaled $2.5 billion in February and $34.2 billion over the past year, up 6.7 percent from the 12 months ending in February 2014 (inflation-adjusted). Exports over the past 12 months are up 39.6 percent from their level in 2009 (inflation-adjusted).Median House Hold IncomeHome prices in Indiana increased by 2.8 percent from the fourth quarter of 2013 to the fourth quarter of 2014. They are up 10.7 percent since their recent low in the first quarter of 2011. In February 2015, builders in Indiana broke ground on 9,050 new housing units (seasonally adjusted annual rate), bringing the average over the past 12 months to 17,483 units. That marks an increase of 2.0 percent from the average over the prior 12 months.Source: http://www.jec.senate.gov/public//index.cfm?a=Files.Serve&File_id=44e3e866-4b69-4668-8a48-e0625b97c65aState Gross Domestic ProductThe Cumulative Growth between 2003 and 2013 adds up to 39.9%. This puts Indiana in 2014 in a nationwide comparison on rank 34. Michigan in contrast, has a cumulative growth between 2003 and 2013 of 14.4%. Giving it a ranking in the same nationwide comparison of 50. Indiana`s recovery is explained by the diverse economy that Indiana has built. They range from heavy manufacturing to pharmaceuticals and medical devices.

IndianaGDP Michigan GDPAbsolute Domestic MigrationDomestic migration includes travel or movement for educational, economic, and political reasons. It is a valuable indicator on the state and the population`s individuals future perspectives within a specific region or in this case the state. When comparing the absolute domestic migration between 2004 and 2013 it is critically higher in Michigan than in Indiana. The absolute domestic migration proportional to the net amount of residents (Indiana at 6.571 million and Michigan at 9.91 million) Indiana had only .543% while Michigan had a 6.34%

Indiana ADM Michigan ADMNon-Farm Payroll EmploymentThe US Bureau of Labor Statistics reports the Non-Farm Payroll Employment statistics on a monthly basis. The statistics represent the total number of paid US workers of any business, excluding general government employees, private household employees, nonprofit organization employees, and farm employees. Over time, these data have proven to be an important indicator of economic conditions due to the fact that they move closely in line with the overall economy and enable to predict economic trends. Indiana ranks 42 out of 50 states from their Cumulative Growth between 2003 and 2013 with a 1.8%. Michigan however ranks last in Cumulative Growth between 2003 and 2013 with a rate of -6.4%.

Indiana Non-Farm Michigan Non-FarmEven though holding a low ranking in economic performance ( 40 for Indiana ) its economic outlook though is ranked in 3rd place. Michigan holding last with economic performance still holds 24th place in its economic outlook ranking. These forward looking rankings are based on the state`s standing (equal weighted average) in the 15 important state policy variables shown below. Data reflect state and local rates and revenues and any effect of federal deductibility.

Indiana Economic Outlook Michigan Economic Outlook

TaxesThe Tax Foundation`s annual State Business Tax Climate Index looks at levels of taxation and complexity of compliance to compare the states on how business friendly in terms of taxes each state is compared to the others. The scale for each factor considered is one to ten, with ten being the best. Rankings are based on unrounded scores and reflect those of the source. The most competitive tax systems are typically found in state that raise sufficient tax revenue with economically neutral and simple tax systems. The least competitive are typically found in states with complex multi-rate corporate and individual tax codes.Ranking on Five Component Taxes

Overall RankCorporate TaxIndividual Income TaxSales TaxUnemployment Insurance TaxProperty Tax

Michigan13101474727

Indiana822101075

Source: http://taxfoundation.org/article/2015-state-business-tax-climate-indexCorporate Income Tax7.0% (flat rate)Indiana will be decreasing this rate to 6.5% on July 1st 2015Individual Income Tax3.4% of federal adjusted gross income with modificationSales TaxState tax rate is 7.0% No additional local taxes Unemployed Insurance TaxMinimum rate of .10% with a maximum of 7.4%Annual taxable wage base is 9,500 Property TaxAverage from .935 all the way to 3.46 depending on taxation area As a percentage of income 2.72%Programs The Indiana Economic Development Corporation helps Indiana businesses and population through the incentives that it promotes to develop jobs and investments in Indiana.Business Financing ProgramsIndustrial Development Grant FundProvides assistance to municipalities and other eligible entities with off-site infrastructure improvements needed to serve the proposed project siteSkill enhancement fundProvides assistance to businesses to support training and upgrading skills of employees required to support new capital investment. Used to reimburse a portion (normally 50%) of eligible training costs of two calendar years from the commencement of projectTax-Exempt bond program Used to lower the costs of financing for manufacturing projects, healthcare facilities, and private institutions of higher education.Loan Guaranty ProgramLoan Guaranties are available to finance land acquisition, building acquisition or improvements, structures, machinery. Equipment, facilities and some working capital. Maximum loan is up to $300,000.Product Development and Commercialization FundingIndiana Business Modernization and Technology Corporation provides loans for businesses in need of financing support for research and development. Also to support the commercialization of a new technology.TECH FundTraining activities eligible for reimbursement must result in a fulltime employee who receives a portable certification in systems administration, systems engineering, or software development. Awards for training have a maximum of $50,000Gain Education and Training, Workforce Investment Now, Skilled Trades Apprenticeship and Regional Skill Alliance, (Skill Enhancement Fund )Advance Indiana grants are designed to provide financial assistance to companies and organizations committed to expanding the skills of their existing workers through training programs that result in industry-recognized credentialsAll have a $200,000 cap on awards ( some require a two year training program )Industrial Development Loan FundState funded revolving loan program provides assistance for industrial growth in Indiana. The grant is given to a city, town, or country for public infrastructure. Source: http://iedc.in.gov/tax-credits-exemptions http://imaps.indygov.org/ed_portal/pdf/in_bag.pdf Tax CreditsEDGE ( Economic Development for Growing Economy)Tax credit provides incentives to businesses to support job growth, creation, capital investment, and to improve the standard of living in Indiana. Refundable corporate income tax credit is calculated as a percent of the expected increase tax withholdings generated from new job creation.HRTC (Headquarters Relocation Tax Credit)Corporations that have $50 million worldwide taxable revenue and create 75 Indiana jobs can receive up to 50% of approved costs of relocating in the form of a tax credit.Indiana Research Expense CreditA state tax credit program to support research and development of new products and processes within Indiana.Enterprise Zone ProgramProvides tax credits to improve the cash flow position of a businesses and its access to capital. The grant maximum is $35,000.

Economic DiversityA comprehensive analysis always reflects data from different perspectives. To measure the economic diversity of Indiana, at first the industry has been divided in their biggest employment industries.IndustryEmploymentRatio

Total3,066,000100%

Transportation & Logistics588,00019.18%

Manufacturing516,90016.86%

Education & Health Services445,20014.85%

Government428,40013.97%

Professional Services319,00010.4%

Leisure & Hospitality296,7009.7%

Financial Services130,2004.2%

Source : http://www.bls.gov/regions/midwest/indiana.htm#eag_in.f.P

Here after the economic diversity is analyzed according to the GDP by industry.

Indiana is far over the average in durable and nondurable manufacturing. It slightly peaks above average in Health Care and Social Assistance. Like Michigan a large amount of its industry is in manufacturing. Yet unlike Michigan its manufacturing has a less volatile business cycle providing Indiana with a better recovery.EnergyLike many of its Midwestern neighbors, Indiana is endowed with plentiful wind and biomass resources, ranking fourth in the nation for ethanol production capacity and also a user of wind, wood waste, and other renewable resources for energy. In an effort to diversify its coal-heavy energy portfolio and increase in-state power generation, the state set a goal in 2011 to obtain 10% clean energy by 2025. This commitment to clean energy is expected to further encourage the sectors growth, but perhaps not at the rate of neighboring states that have more aggressive policies and similar renewable resources.(Acore 2013)RebatesCitizens Gas (Commercial and Residential)Citizens Gas of Indiana will give a rebate for its commercial and residential users. When they install one of several different types of natural gas efficient appliances.Tax IncentivesProperty Tax Incentive:Solar, wind, hydropower and geothermal systems and their affiliated equipment (including storage and distribution equipment) are exempt from property tax. For real property and mobile homes equipped with renewable energy systemsIncome Tax Deduction: 50% of the cost of materials and installation labor for solar powered roof fans, up to $1,000Sales and Use Tax Exemption: Certain wind turbine components are exempt from the state sales and use taxAlternative Fuel Vehicle (AFV) Manufacturer Tax Credit: 15% of qualified investments for the manufacture or assembly of AFVs Facility must agree to maintain operations for at least 10 years, and employees must be paid 150% of the states hourly minimum wageSource: http://www.acore.org/files/pdfs/states/Indiana.pdf

Minnesota

At a glance:

Gross Domestic Product: Minnesota real GDP in 2013 was $289.13 billion. The real GDP in Minnesota grew by 2.8 percent in 2013 the national average growth rate of 1.8 percent. Since 2009, annual Minnesota GDP growth has averaged 2.7 percent, compared with a national average annual growth rate of 2.0 percent. Unemployment: The unemployment rate in Minnesota was 3.7 percent in March 2015, holding constant from February. The rate was 1.8 percentage points below the national rate of 5.5 percent. Unemployment is down 0.7 percentage point from one year earlier and is 4.4 percentage points below its recent peak of 8.1 percent in June 2009. There were 113,000 Minnesota residents unemployed in March 2015. Exports: In Minnesota, goods exports totaled $1.5 billion in February and $20.4 billion over the past year, up 3.8 percent from the 12 months ending in February 2014 (inflation-adjusted). Exports over the past 12 months are up 22.9 percent from their level in 2009 (inflation-adjusted).

Median Household Income:The Median Household Income in Minnesota was $60,900 ($65,200 in 2007 (pre-recession)), compared to $51,900 in the United States ($56,400 in 2007).

Source: http://www.jec.senate.gov/public/index.cfm?p=statebystatereport

According to the 2015 ALEC-Laffer State Economic Competitive Index, Minnesota ranks 30th on the economic performance rank (1 = Best / 50 = Worst). This backward-looking measure is based on the states performance in the following three important performance variables, which are highly influenced by state policy:

4. State Gross Domestic Product

The Cumulative Growth between 2003 and 2013 adds up to 42.8%, ranking Minnesota in 2014 in a nationwide comparison on rank 28. Michigan in contrast, has a Cumulative Growth between 2003 and 2013 of 14.4%. Minnesota slightly outperforms Michigan in the most interesting part since 2010. The faster recovery in Minnesota compared to Michigan can be explained due to the economic diversity in Minnesota and its strength in core resources like medical devices, agriculture and health care.

Minnesota 1Michigan 1

5. Absolut Domestic Migration

Domestic Migration includes travel / movement for educational, economic and, political reasons. It is a valuable indicator reflecting the actual state and the individuals future perspectives within a specific region or in this case a whole state. The absolute domestic migration between 2004 and 2013 is critical higher in Michigan than in Minnesota. Comparing the absolute domestic migration proportional to the net amount of residents (Minnesota 5.457 million & Michigan 9.91 million by the end of 2014), Minnesota only experienced a domestic migration of 1.26% whereas Michigan had to deal with 6.34%.

Minnesota 2

Michigan 2

6. Non-Farm Payroll Employment

The U.S. Bureau of Labor Statistics reports the Non-Farm Payroll Employment statistics on a monthly basis. The statistics represent the total number of paid U.S. workers of any business, excluding general government employees, private household employees, nonprofit organization employees and farm employees. Over time, these data have proven to be an important indicator of economic conditions because they move closely in line with the overall economy and enable to predict economic trends. Michigan ranks last of all states with a Cumulative Growth between 2003 and 2014 of -6.4%. Minnesota however ranks 23 with a cumulative growth of 5.5%. It is interesting to see, that the cumulative growth in Michigan already declined overall constantly forehand to the recession. This is also a reason why the years 08/09 had an even stronger effect on Michigan than on Minnesota, where the decline between 2008 and 2009 was -4.5% compared to a high -8% in Michigan.

Michigan 3Minnesota 3

Having a medium rank on the economic performance, on the economic outlook rank however Minnesota achieves the 48th place (Michigan ranks 24th) and belongs to the 3 worst ranks. This forward-looking forecast is based on the states standing (equal-weighted average) in the 15 important state policy variables shown below. Data reflect state and local rates and revenues and any effect of federal deductibility:

Especially the high marginal personal income tax rate, the top marginal corporate income tax rate as well as the personal income tax progressivity in Minnesota impact the economic prediction negatively. The tax structure is analyzed in detail hereafter. All 15 variables are presented in the charts below:

Michigan 4Minnesota 4

Source: http://www.alec.org/publications/rich-states-poor-states/

Taxes

State business tax climate index of the United States 2014

The Tax Foundations annual State Business Tax Climate Index looks at levels of taxation and complexity of compliance to compare the states on how "business friendly" in terms of taxes each state is compared to the others. The scale for each factor considered is one to ten, with ten being the "best". Rankings are based on unrounded scores and reflect those of the source. The most competitive tax systems are typically found in states that raise sufficient tax revenue witheconomically neutral and simple tax systems. The least competitive are typicallyfound in states with complex, multi-rate corporate and individual tax codes; above-average sales tax rates that exempt few business-to-business transactions; high state tax collections; and few institutional restraints on the level oftaxation or spending.

Ranking on Five Component Taxes

Overall Index RankCorporate TaxIndividual Income TaxSales TaxUnemployment Insurance TaxProperty Tax

Minnesota474446372934

Michigan13101474727

Source: http://taxfoundation.org/article/2015-state-business-tax-climate-index

Corporate Income Tax 9.8% In addition, Minnesota levies a 5.8% tentative minimum tax on Alternative Minimum Taxable Income. Flat rate (> $0)Individual Income Tax Rate Married joint Married Separate

More ThanBut not more thanMore thanBut not more than

5.35 percent$0$36,650$0$18,330

7.05 percent$36,651 $145,620$18,331 $72,810

7.85 percent$145,621 $258,260 $72,811$129,130

9.85 percent$258,261$129,131

Rate Head of household Single

More thanBut not more thanMore thanBut not more than

5.35 percent$0$30,870 $0$25,070

7.05 percent$30,871 $124,040$25,071 $82,360

7.85 percent$124,041$206,610$82,361$154,950

9.85 percent$206,611 $154,951

Federal Income Tax Deductible: no

Sales Tax State Tax Rate 6.875 % (7th of 50) With local taxes, the total sales tax rate is between 6.875% and 8.375%. Combined Rate 7.2 % (With average local taxe rate of 0.33%). (17th of 50)

Unemployment Insurance Tax $30,000 the annual taxable wage base for 2015 is the amount of covered wages per employee that is taxed 0.10% - the base tax rate (for unemployment insurance trust fund) is the tax paid by all employersTax Rate for New Employers is either: 1.66% - Tax rate for new employers in a non-high experience rating industry (add 0.10% base tax rate for 2015 UI tax rate of 1.76%) 8.90% - Tax Rate for new employers in a high experience rating industry (add 0.10% base tax rate for 2015 UI tax rate of 9.00%)Employers with an Experience Rating: Tax rate varies with the amount of UI benefits charged to individual account 8.90% - maximum tax rate (add 0.10% base tax rate for 2015 UI tax rate of 9.00%)-> Workforce Development Assessment (not a UI tax) 0.10% of taxable wages.

Property Tax Percentage Of Property Value: %1.05 (19th of 50) Percentage Of Income: % 3.1 (21st of 50) Median Property Tax: $2.098 (19th of 50)

Programs

The Minnesota Department of Deployment and Economic Development covers assistance for three stakeholders: job seekers, business and local government. Especially the latter supports communities throughout the state with support on the following topics: Financial Assistance with loan and grant programs Public facilities authority provides communities with expertise Business Subsidy Reporting to simplify reports for local governments Shovel-ready site certification to enable business development Office of broadband development

Besides the state offers several financing and tax credit programs, which are described hereafter:

Business Financing Programs Minnesota Investment Fund Financing targets job creation in industrial, manufacturing and high-tech industries. Minnesota Job Creation Fund Provides up to $1 million after specified job creation and capital investment goals are achieved. State Small Business Creation Initiative Programs to help creditworthy companies get access to capital they need to grow. The initiative allocates up to $15.4 million into four state programs: the Capital Access Program, Emerging Entrepreneurs Fund, Small Business Loan Guarantees and the Angel Loan Fund. To learn more about each fund, select the tabs below. With a goal of attracting $10 of private investment for each federal dollar invested, the SSBCI is expected to spur more than $150 million in lending to small businesses statewide and fuel the creation of more than 3,000 new jobs in Minnesota. Flood Recovery Financing Awarded to local units of government, which use the funding to make loans to flood-affected businesses. Urban Initiative Loan Program Helps grow minority-owned businesses and creates jobs in economically distressed areas of the Twin Cities. Indian Business Loan Program Supports Indian-owned businesses and promotes economic opportunities for Indian people statewide. Small Businesses Development Loan Program Provides financing for business expansions that result in the creation of new jobs. Minnesota Reservist and Veteran Business Loan Program For companies with employees called to active duty and veterans returning from active duty. Tourism Business Septic Tank Replacement Provides financing to help certain tourism-related businesses replace failed septic systems. Minnesota Minerals 21st Century Fund Provides loans to or makes equity investments in innovative mineral processing facilities. Innovation Voucher Program Helps small businesses bring innovative new products and services to market. Companies with 40 or fewer employees, with at least half of the employees based in Minnesota, may apply. Recipients must provide a cash match equal to 50 percent of the voucher award. For example, under the matching requirement, a company that receives the maximum award of $25,000 must contribute $12,500. Federal Funding for High-Tech companies Small Business Innovation Research and Small Business Technology Transfer programs.

Source: http://mn.gov/deed/business/financing-business/deed-programs/

Tax Credits: Angel Tax Credit Program Provides incentives to invest in startup and emerging companies focused on high technology. $16 million in tax credits is available. Minnesota's Angel Tax Credit provides a 25-percent credit to investors or investment funds that put money into startup companies focused on high technology, new proprietary technology, or a new proprietary product, process or service in specified fields. The maximum credit is $125,000 per person, per year ($250,000 if filing jointly) Greater MN Job Expansion Program Sales tax refunds for 7 years to existing businesses expanding in Greater Minnesota. Tax-Free Development (JOBZ) Tax exemptions for expanding or relocating in targeted areas outside the Twin Cities. Data Center Tax Incentives Sales tax exemptions for 20 years on equipment for qualifying investments. R&D Tax Credit Program Equal to 10 percent of qualifying expenses up to $2 million for certain R&D activities. Border Cities Enterprise Zone Provides tax credits for business investment, development, and job creation in qualifying cities. The Border-Cities Enterprise Zone Program provides business tax credits (property tax credits, debt financing credit on new construction, sales tax credit on construction equipment and materials, and new or existing employee credits) to qualifying businesses that are the source of investment, development, and job creation or retention in the Border-Cities Enterprise Zone cities of Breckenridge, Dilworth, East Grand Forks, Moorhead, and Ortonville. SEED Capital Investment Credit Incentives for business investments in targeted cities on Minnesota's western border.Source: http://mn.gov/deed/business/financing-business/tax-credits/

Nonetheless there is no explicit and public economic development plan, including a long term vision for Minnesota as well as defined short-term goals, published.

Economic Diversity

A comprehensive analysis always reflects data from different perspectives. To measure the economic diversity of Minnesota, at first the industry has been divided in their biggest employment industries:

Economic Diversity according to biggest employment industries by March 2015:

IndustryEmploymentRatio

Total:2,906,900100%

Transportation and logistics520,90017.92%

Education & Health Services509,80017.54%

Government420,40014.46%

Professional services359,20012.36%

Manufacturing316,20010.88%

Leisure & Hospitality260,9008.98%

Financial services178,5006.14%

Source: http://www.bls.gov/regions/midwest/minnesota.htm#eag

Hereafter the economic diversity is analyzed according to the GDP by industry.

Economic diversity according to the GDP by industry (total real GDP: $289.13 billion):

Source: Regional Perspectives: Minnesota Economic Outlook, Chase 2013

Minnesota is above average in health care and social assistance, medical devices (contributes to durable manufacturing) and agriculture. These are critical resources in a global economy and the strength in this core strategies enabled Minnesotas recovery. This shows that if the objective of economic diversity to protect Michigan from economic shocks is pursued, it is also important to focus in shock resistant critical resources.

Energy

Generation:

To have a chart comparing the renewable electricity capacity in the Midwest, please go to the report on Illinois and see section Energy. Minnesota ranked 2 out of the 12 Midwestern States in 2011 with a capacity of 3.413 megawatts in total including hydro, out of which 2.718 are generated by wind. Michigan in contrast ranked 9 out of 12 with 1.229 megawatts in total, including 377 megawatts produced through wind power (Most up-to-date data on a comparison for the Midwestern States).

Policy:

Minnesota has been diligent in providing financial incentives that help support its ranking as a top five ethanol- producing state and a leading producer of biomass and wind power. Minnesota also strengthened its renewable portfolio standard (RPS) this year by adopting a solar energy carve-out, which requires investor-owned utilities to supply at least 1.5% of their energy sales from solar power by 2020. This carve-out, coupled with new financial incentives for solar energy, is expected to increase the states installed solar capacity to 450 MW. With continued policy support, the states wind, solar, and bioenergy markets hold potential for further growth. (Acore 2013) To achieve this initiative several rebates, tax incentives and grants have been introduced: Rebates: Made in Minnesota Solar Thermal Rebate: 25% of installed costs for systems with components manufactured in Minnesota Maximum rebates single-family residential: $2,500; multi-family residential: $5,000; commercial: $25,000; program budget of $250,000/year

Tax incentives: Sales tax exemption:Applies to solar energy and wind power systems, and the materials used to manufacture, install, construct, repair or replace wind energy systems Property Tax Exemption: For real property taxes for solar PV and real and personal property taxes for wind; in lieu of property tax, wind projects charged a production tax Investment Tax Credit: For investments in small businesses that use or are involved in the research or development of cellulosic ethanol; 25% of investment,