Michigan Businesses Seek Property Tax Reform

By US Daily Review Staff.

Michigan has been known for years for having one of the most anti-business environments in the country and is now working to overcome that reputation. In recent years it has tacked some challenging fiscal issues and a tax environment that is very hostile to business. Although its labor practices remain one of the most hostile to business in the country and that continues to be a sacred cow, policy makers continue to make efforts towards reform.

The Michigan Business & Professional Association released a statement that “applauds the state legislature for taking the next logical step to boost capital investment in Michigan and ensure long-term growth – by starting Senate Finance Committee hearings on eliminating the Michigan Personal Property Tax on businesses.”

This tax, which is assessed on non-permanent business property such as machinery, furniture, and computers, costsMichigan businesses approximately $1.2 billion per year in direct collections. However, what is often not considered are the extra costs associated with paperwork and inventory to comply with the tax rules. This is extra money which could otherwise be devoted to truly productive investments, like added employees, increased wages, or further capital improvements.

“Many of our neighboring states, including Ohio, Illinois, and Wisconsin, have eliminated this outdated tax, having realized the burden it places on businesses both small and large, and without a significant decrease in overall revenues,” said MBPA President Jennifer Kluge.

Currently, local governmental units and school districts receive about 80 percent of personal property tax revenue. However, in many cases, the communities themselves have over the years given up much of this revenue by granting personal property tax abatements requested by companies wishing to update or expand their facilities.

“In short, the tax is antiquated, cumbersome, and does not provide the desired ‘bang for the buck’ in providing local tax revenue,” said Kluge. “Our association understands that a solution must include a way to help local communities and school districts make up for any lost revenue, which remains a major barrier to seeing the end of this tax. There are a number of alternative solutions which may satisfy all parties.”

Kluge noted that the bills introduced by Michigan senators on April 17, 2012, would put in place a small business personal property tax exemption beginning December 31, 2012 in which all industrial and commercial personal property with a taxable value of less than $40,000 becomes exempt. The $40,000 exemption is applied in each local jurisdiction in which a business taxpayer owns property, so a single firm with multiple small locations, such as a chain restaurant, could receive multiple exemptions. Above $40,000 in taxable value, there is no exemption. This will eliminate 75% to 80% of the personal property tax returns filed annually and save significant time and money for both small businesses and local governments.

“The discussion on this tax is crucial to hear everyone’s voice and to construct mutually agreed-to tax policies to help businesses, and make Michigan the ‘go-to’ state for investment and jobs,” concluded Kluge.

According to a statement, the group is “based in Warren, Mich., the MBPA is the largest business organization of small to medium-sized businesses in Michigan, representing more than 20,000 members who employ over 160,0000 persons. Members include attorneys, physicians, architects, accountants, construction companies, banks, retail, wholesalers, manufacturers and the like.  Member businesses receive numerous benefits including free legal and financial consultations; discounted technology, automotive and office products; employee training and recruitment assistance; and competitive group insurance rates. The MBPA is a sister association to the Michigan Food & Beverage Association (MFBA).”

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