Dow Chemical Co (NYSE:DOW) will now file its business taxes under an old tax code following an approval of restructured tax incentives by the Michigan Strategic Fund board. The restructuring will involve the transfer of tax credits to AK Steel; an Ohio steelmaker that Dow Chemical is believed to have bought close to three years ago. The deal introduces a new cap on the Michigan Economic Growth Authority (MEGA) tax credits, which will be at $61.4 million for Midland-based Dow.
Opposition to the deal
According to state economic development and company officials, such deals are of the essence. They could be a lead into Dow’s full takeover of Dow Corning and West Chester, which would result in the AK Steel’s purchase of the Russian company; Severstal. However, even with this Dow stands to lose a renewable energy zone designation.
The new deal for the steelmaker has nonetheless faced criticisms from different quarters, the likes of environmental groups as well as some Republicans. Rob VerHeulen of Walker, the GOP Rep laments, “I am deeply disappointed in this decision. The Michigan Strategic Fund Board should not have made this decision without the Legislature’s involvement and oversight.”
Some lawmakers are pointing out at the lack of transparency in the negotiations on the deal citing that the transfer of credits brings back the MEGA tax credit program, which closed several years ago. A majority of them are of the opinion that the strategic fund board should delay a decision until May to give room for public vetting of the proposal.
But even then Dow irresistible ambitions
According to an executive director of the Michigan League of Conservation Voters, Lisa Wozniak, the negotiating of the agreement did not engage the legislative or the public. This alone is a violation of the fundamental standards of good governance.
However, all these allegations will not divert Dow’s ambitions. In taking the ownership of the Dow Corning, the company expects to create not less than 1,700 jobs. A Dow VP and site director of Michigan operations, Rich Wells also confirms that they are taking a strategic position in an effort to capture the growth in the manufacturing.
