Michigan House Bill HB5413

Michigan 2025-2026 Regular Session

• Introduced: 12/18/25
• Refer: 12/18/25

Caption

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

Impact

The legislative intent of HB 5413 is to foster fairer economic competition between states. It seeks to eliminate the practice of states engaging in 'race-to-the-bottom' subsidies, which can disrupt market dynamics and lead to resource misallocation. The compact aims to establish a more equitable landscape where businesses can compete based on merit rather than financial incentives provided by state governments. If enough states join this compact, the provisions will take precedence over any existing conflicting state laws, aligning economic strategies with the values outlined within the compact.

Summary

House Bill 5413, known as the Corporate Welfare Prohibition Compact Act, aims to prevent state governments from providing subsidies to specific businesses or industries that operate within their jurisdictions. The bill articulates a broad understanding that subsidizing some businesses at the expense of others can be detrimental to national economic health, leading to inefficiencies and fostering corruption. By entering into this compact, Michigan and other states would agree to refuse new subsidies aimed at enticing companies to relocate or open facilities within their states, barring agreed contractual obligations made before the compact's activation.

Contention

While supporters of HB 5413 argue that the bill promotes fairness and prevents the misuse of taxpayer funds, critics may contend that it limits a state’s ability to incentivize businesses and attract economic investment. This could be particularly contentious in regions that rely on such subsidies to boost local economies or create jobs. Moreover, the question of enforcement and the ability for residents to challenge non-compliance will be critical in understanding the bill's real-world implications, making these points of contention crucial for ongoing debates surrounding this legislation.