LANSING – To quicken the pace for turning Michigan's economy around, the House today strengthened its comprehensive business tax and incentive package that rewards investment and protects Michigan-based companies, and sent the package back to the Senate.
"The Michigan Business Tax, by design, is a comprehensive approach to jumpstarting Michigan's struggling economy and rewarding companies that invest here as opposed to those that create jobs in other states and countries," said House Speaker Andy Dillon (D-Redford Twp.). "By further enhancing this reform package, what we have done is paved the way for the creation of even more jobs, which will give Michigan's economy the boost it needs."
The House first unveiled the plan in April – putting out the only plan of its kind to address both the Personal Property Tax and the Single Business Tax (SBT) in such a far-reaching manner. The Michigan Business Tax (MBT) would allow 75 percent of businesses in Michigan to pay less in taxes, while protecting funding for education, health care and the 21st Century Jobs Fund.
The Single Business Tax (SBT), widely regarded as an outdated tax structure, is due to expire at the end of the year. The MBT provides a revenue-neutral replacement that will spur job creation by rewarding companies that invest in our state.
In developing the tax reform legislation, House lawmakers consulted with a variety of leaders from the public and private sectors, including tax experts, small business leaders, local government, the nonprofit community, organized labor and many others. The result is a comprehensive package that incorporates elements from the plans offered by Governor Jennifer M. Granholm, the State Senate, the Michigan Chamber of Commerce, the Grand Rapids Chamber of Commerce and others.
This plan has drawn support from the Michigan Chamber of Commerce, the Michigan Manufacturers Association, the auto industry, and other groups that are vital to our economy.
"This crisis is too urgent for us to fall back on half-measures," said State Representative Steve Bieda (D-Warren), Chair of the Tax Policy Committee and a major architect of the plan. "Michigan has once again seen its credit rating downgraded – the longer we wait to replace the Single Business Tax, the longer it will take for our state's economy to get back on track. Waiting is not an option, and I urge the Senate to act quickly on this, for the sake of our economic future."
The House's solution for replacing the SBT and reforming the Personal Property Tax will:
- Provide more than $600 million in new tax credits that reward Michigan businesses for investment, compensation, and research and development.
- Reward capital investment by cutting the Personal Property Tax by an average of
73 percent for manufacturers and 46 percent for commercial businesses, while also protecting funding for local units of government. - Boost job creation by providing credits for investment in Michigan and for Michigan payroll.
- Help small businesses by exempting companies with less than $350,000 in gross receipts from taxation. Businesses with up to $700,000 in gross receipts will pay reduced rates. The plan also enhances existing small-business tax credits.
- Protect education, health care, police and fire protection, and other essential services by ensuring revenue neutrality.
- Benefit most businesses by creating a 0.488 percent tax on net worth and a 6.95 percent tax on profits.
- Offer a rebate to business taxpayers if the tax generates 10 percent beyond the revenue-neutral point.
- Create a Michigan Entrepreneurial Credit to provide full tax exemption for small start-up businesses.
"By strengthening the Michigan Business Tax even further, we send a clear, strong message to businesses: The Great Lakes State is the place to do business," said State Representative Paul Condino (D-Southfield), who is Vice-Chair of the Tax Policy Committee. "This plan draws emerging industries and 21st century jobs providers here. Our state has a long history of business innovation and success, and the Michigan Business Tax will lead the way to our return to prosperity."