LANSING – In a move to jumpstart Michigan's economy and reward businesses that create jobs here in Michigan, the Michigan House of Representatives today passed a comprehensive business tax and incentive package that rewards investment, protects Michigan-based companies, and protects funding for education, health care, and police and fire protection.
"This plan is the first piece of the puzzle for resolving Michigan's budget crisis, and it will help jumpstart our struggling economy," House Speaker Andy Dillon (D-Redford Twp.) said. "Replacing the Single Business Tax with a more equitable solution that rewards investment and protects Michigan-based companies was vital to getting our state back on track. We've taken a huge step toward moving Michigan forward today."
Under the Michigan Business Tax (MBT), about
75 percent of businesses in Michigan would pay less in taxes. It
is 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 House's solution for replacing the SBT and reforming the Personal Property Tax will:
- Provide $700 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 7 percent tax on profits.
- Offer a rebate to business taxpayers if the tax generates 10 percent beyond the revenue-neutral point.
"The new Michigan Business Tax will make Michigan a magnet for emerging industries and 21st century jobs providers," said State Representative Steve Bieda (D-Warren), who led the workgroups that generated ideas for the MBT and is chair of the House Tax Policy Committee. "The MBT will give companies an incentive to create jobs here for our workers. I urge my colleagues in the Senate to move quickly to approve the Michigan Business Tax so we can get it to Governor Granholm for her signature as quickly as possible."
"It is imperative that we protect funding for essential services like health care and education," said State Representative Paul Condino (D-Southfield). "The MBT is a comprehensive solution that protects these vital services for our communities while also stimulating job creation. This is the right way to get Michigan moving in the right direction."
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.
"Replacing the Single Business Tax with a plan that will help create good-paying jobs for our workers is the right way to get Michigan on the road to recovery," said State Representative Barb Farrah (D-Southgate). "In addition to rewarding companies for job creation, this MBT protects funding for our most vital services – health care, education and public safety. The MBT will get Michigan moving in the right direction."