No More Uncertainty: Business Tax Deal Done

By: Tony Tagliavia Email
By: Tony Tagliavia Email

It's a plan the governor and legislative leaders hope will bring new jobs into the state and help those already here grow.

"It will represent a tax cut for 7 out of 10 businesses," Gov. Jennifer Granholm said Wednesday, announcing the new Michigan Business Tax.

Despite that promised cut, the plan is expected to bring in the nearly $2 billion per year the current Single Business Tax does.

Sen. Nancy Cassis (R-Novi) says that's achieved by shifting some of the tax burden to firms that do business in Michigan but aren't based here.

The new plan will tax 4.8 percent of business incomes. It also includes a tax on margins -- basically, businesses would pay tax on their sales minus their purchases.

There are credits for creating jobs and research and exemptions for small businesses.

Senate Majority Leader Mike Bishop (R-Rochester) called the tax "broadly based" and "fair."

Manufacturers, like the Big Three, are expected to pay only about a third of the personal property taxes they pay on things like equipment.

Granholm says the plan will compensate cities and townships for lost personal property tax revenue.

"We now provide certainty to the business community," House Speaker Andy Dillon (D-Redford Twp.) said. "And we provide an environment where people can get back to work in Michigan."

Certainty is also the key word for those trying to attract businesses to Michigan and here to Lansing. Because even if businesses aren't perfectly happy with the tax structure, they at least know what it is.

"Uncertainty is one of the worst things that can face a business," said Bob Trezise, president and CEO of the Lansing Economic Development Corporation. "And it was really getting bad over the last few months."

Trezise says since old the Single Business Tax was set to be eliminated with no replacement announced, businesses told him they couldn't make a decision about moving to Lansing without knowing what the new business tax would be.

"Not only some businesses, but really big businesses," he said.

Businesses he hopes are now ready to come to Lansing with new jobs in tow.

The plan still has to be passed by both houses and signed by the governor. That could happen as early as next week.

But Trezise says there's one more obstacle: next year's multi-billion dollar general deficit.

"We can't continue to have headlines this fall and next spring on and on about the budget crisis," he said. "That uncertainty needs to be resolved now, too."

That's something the governor and leaders say they are trying to do.


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