State: interstate compacts and agreements; corporate welfare prohibition compact; enact. Creates new act.

Michigan House Bill 5413, introduced on December 18, 2025, aims to establish the 'Corporate Welfare Prohibition Compact.' This compact is an agreement between participating states to eliminate the use of economic incentives, such as tax breaks and subsidies, to attract or retain businesses. The goal is to prevent a 'race to the bottom' where states compete by offering increasingly generous incentives, which can strain public resources and create unfair advantages. By joining this compact, Michigan would commit to refraining from offering such incentives, promoting a more level playing field for businesses and encouraging economic development based on factors like infrastructure, workforce quality, and overall business environment.

Supporters of HB5413 argue that the bill promotes fiscal responsibility and fairness in economic development. By eliminating costly incentives, the state can allocate resources more effectively, investing in public services and infrastructure that benefit all residents. Additionally, proponents believe that this approach discourages businesses from exploiting states by playing them against each other for better deals, leading to more sustainable and equitable economic growth.

Critics of HB5413 contend that the bill could put Michigan at a competitive disadvantage in attracting and retaining businesses, especially if neighboring states continue to offer economic incentives. They argue that, without the ability to provide such incentives, Michigan might lose potential investments and job opportunities to states that are not part of the compact. Opponents also express concern that the bill could limit the state's flexibility in responding to unique economic challenges or opportunities.