New Biz Tax Signed: Could It Cost You More?

By: Tony Tagliavia Email
By: Tony Tagliavia Email

With a signature now in place, Michigan has a new tax to replace the old Single Business Tax lawmakers voted to repeal in August 2006.

"This Michigan Business Tax, as a replacement, will encourage businesses and jobs to grow in Michigan," Gov. Jennifer Granholm said after signing the new tax into law Thursday afternoon.

"It's bascially a 10 percent tax cut for many small businesses, over 40,000 small businesses," said Todd Anderson, director of government relations for the Small Business Association of Michigan.

"Those companies will invest that money back in their businesses ... which will hopefully mean more jobs in Michigan."

For General Motors, like most manufacturers, the MBT means a large cut in personal property taxes -- the money businesses pay on their equipment.

"I think it's important for GM because it makes the state more competitive on its business tax with other states," GM Government Relations Regional Director Eric Henning said.

The new plan taxes business income and margins -- a company's sales minus it's purchases.

"This business tax gives tax relief to seven out of 10 businesses in Michigan," Granholm said.

But insurance companies will pay more in taxes.

An industry spokeswoman says that means you'll pay more to insure your home and your car.

"Over time, insurance consumers are going to pay for that increase," said Lori Conarton, communications director for the Insurance Institute of Michigan.

By her estimate, the insurance industry faces an extra $30 million in taxes. Insurance companies have paid relatively low taxes under the Single Business Tax.

But Conarton says those low taxes have helped grow the sector.

"Our insurance industry here local employes 6,000 people so it's really contributing to our local economy," she said.

So the companies that insure cars and homes aren't happy to be paying more. What's worse, she says: the insurance industry got cut out of credits other companies can get for creating jobs.

"Insurance companies are one of the most profitable industries in the world," State Rep. Mike Simpson (D-Liberty Twp.) said. "We're just asking them to pay their share."

And for now they will have to pay what the new tax requires, while industry lobbyists try and tweak a tax leaders say should help most businesses.

"You will now start to see very soon job creation as a result of this tax," Simpson said.

A welcome prospect for a state reeling from job losses.


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Comments are posted from viewers like you and do not always reflect the views of this station.
  • by Robert Location: Lansing Twp on Jul 14, 2007 at 09:49 AM
    There again, ourGovernment Leaders have shifted the tax burden off the big business and on to the backs of the comsumers by way of their Insurers.
  • by matt Location: monroe on Jul 14, 2007 at 05:47 AM
    I get tired of hearing, we base your automobile insurance rates on your credit rating. My licence is clean as a bell, I'm damn proud of that, but I get shoved in a pool of drivers because I've made some bad choices in the past. Then they tell me that drivers with poor credit are much more probably for accidents?! And them these idiots come on the news and say if rates are lowered that the Better drivers will suffer!!! Rate us according to our driving records not our credit rating, I can pay 1000.00 to take care of that, but I shouldn't have to do that. I pay my way but when these supposed ANALYSTS come on the news and give these totally ridiculous reasons why the rates are up, its b.s. Now with this new law in effect, I can see my rates flying again when I have not had a ticket or accident in almost 10 yrs.
  • by shelly Location: fowlerville on Jul 13, 2007 at 02:02 PM
    Just another reason for those struggling to not carry insurance at all
  • by Sally York Location: Brighton, on Jul 13, 2007 at 04:09 AM
    What also needs to be done is cap the % that the Insurance industry can pass this tax on to its customers. Insurance companies will use any excuse to jack up the premimums and this is really to handy without any curbs.
  • by Rick Location: Stockbridge on Jul 12, 2007 at 08:26 PM
    This is exactly the same proposal that was rejected (wisely) a year ago. All it amounts to is a back door tax increase on everyone in the state. But, since techniclly our dear governor didn't directly raise your taxes, she did by raising taxes on the insurance companies, knowing full well that they would just pass the cost on to EVERYONE! Sorry Gov, we see right through you, and all of the rest of those who believe that they know better than we do what's best for us.
  • by pam Location: Jackson on Jul 12, 2007 at 06:43 PM
    Why not increase the sales and do away with these luxary taxes. Sales tax is more effective than income tax and it taxes everyone evenly.
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