Lawmakers Debate Business Tax Plan

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Republican lawmakers said Thursday they support a revised business tax plan that would fully replace revenue for state government, a concession to Democrats who insist that Michigan's next business tax be revenue-neutral.

The sides and the business community remained divided, however, a day after Democrats had said a deal was close.

Republicans who lead the Senate held a hearing on their latest proposal, which they said was pitched to House Democrats late Wednesday. But angry Democrats complained the issue was not listed on the committee agenda before many legislators left for a policy conference on Mackinac Island.

"We agree on revenue neutrality," said Senate Finance Chairman Nancy Cassis, a Republican from Novi. "That isn't where we started. But we have more than moved in that direction."

The Senate previously had passed a plan with a $600 million tax cut for businesses. The Single Business Tax, which expires at the end of this year, brings in about $1.9 billion a year.

Democrats who control the House have approved revenue-neutral legislation that would tax out-of-state companies at higher rates and give breaks to Michigan businesses, especially the manufacturing sector.

But Thursday's hearing again showed the philosophical divide between the chambers' competing plans.

The House plan has gained backing from Michigan's biggest employers and is seen as friendly to domestic automakers and large manufacturers with machinery and equipment. Senate Republicans say their plan will help manufacturers but not at the expense of burdening small- and medium-sized businesses with more taxes.

Sen. Gilda Jacobs, a Democrat from Huntington Woods, said the GOP hearing had a circus-like atmosphere. Republicans criticized Democrats for going to Mackinac Island, though Republicans also were traveling there.

"To me, this sort of was a stealth committee hearing," she said. "It's all a show. It's ridiculous. We should be negotiating."

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