LANSING – House Democrats won a huge victory for Michigan's business community today when the House and the Senate reached an agreement on the Michigan Business Tax, a comprehensive solution to replacing the Single Business Tax that rewards investment, protects Michigan-based companies, and safeguards funding for education, health care, and police and fire protection.
"The new Michigan Business Tax rewards companies that invest in Michigan and create jobs for our workers, and that's what Michigan needs to get our economy back on track," said House Speaker Andy Dillon (D-Redford Twp.). "Replacing the Single Business Tax with a plan that rewards investment and research and development is critical to making Michigan a magnet for 21st century job providers. This plan brings significant rewards to businesses that want to locate in Michigan, and to our businesses that already support Michigan's economy. This is the right plan to move Michigan forward."
Under the agreement reached late Tuesday and solidified today, about 75 percent of businesses in Michigan would pay less in taxes under the Michigan Business Tax (MBT). 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 Democrats' MBT plan will:
- Provide over $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 67 percent for manufacturers and 23 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 $20 million 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.
"The Michigan Business Tax provides robust tax incentives for companies that invest in job creation, machines, equipment, and research and development, which is just what this state needs to rejuvenate our economy," 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. "We must give businesses good reasons to set up shop in Michigan, and that's what the MBT does."
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.
"Protecting our vital services like education, health care, and police and fire protection is as essential to moving Michigan forward as replacing the SBT," said State Representative Paul Condino (D-Southfield). "The revenue-neutral aspect of the MBT will help protect these essential services. This is a comprehensive solution that will protect our residents, give our businesses a boost and help stimulate job creation. This is the right plan to get Michigan moving in the right direction."