Annnnnnd they're off! I hope they came up with a different name. I never want to hear "SBT" again.
LANSING, Mich. - Michigan businesses would see their overall tax rate drop to what the Granholm administration says is the nation's lowest under a new tax plan the administration plans to release Wednesday, The Associated Press has learned.
Businesses would be taxed at one rate - 0.125 percent - on their gross receipts and assets, while profits would be taxed at a rate of 1.875 percent, according to two of the people who were briefed on the plan by administration officials. Both spoke Tuesday on condition of anonymity because the plan had not yet been released.
Unlike the current Single Business Tax, the new tax wouldn't include payroll or benefits such as health insurance in calculating what's due.
It's designed to bring in the same amount of tax revenue that businesses now pay, but it lowers the tax rate and broadens the base. Businesses with $350,000 or less in gross receipts wouldn't have to file, the same as under the SBT.
The Detroit News has the best breakdown on the plan.
Big winners in the redrawn tax scheme would be manufacturers, construction and trucking companies, and most service businesses, sources said. They would see equipment tax reductions. They'd also benefit from the shift to taxing sales and profits rather than taxing company payroll. and away from current taxes on company payroll.
Losers would include insurance companies, banks and other financial service businesses and real estate firms. They would gain little from the equipment tax cut and some would take a hit from the levy on assets. Insurance companies would face pay a $90 million tax increase.
-snip-
Those familiar with the proposal said 111,000 businesses across the state would pay lower taxes as a result of the plan, while 32,000 will pay more. Also, out-of-state businesses would pay $150 million more, while businesses located in Michigan would pay $150 million less under the reconfigured tax.
Overall, the new business tax scheme would generate revenue of $2.4 billion a year. Those receipts would replace the $1.74 billion yielded by the current Single Business Tax and it would also cover the $660 million equipment tax cut.
This break-even part of the proposal is certain to raise concerns among some Republicans, economists and business leaders who say the state needs a net business tax cut to make it more competitive. Granholm has said the state budget canÂ’t absorb a business tax cut without hurting education, public safety and human services programs. "We are simply uncompetitive in our business tax burden and must take steps to remedy that," said Tricia Kinley, a tax expert at the Michigan Chamber of Commerce, which backs a plan that would cut business taxes by $500 million.
If the screaming gets too loud from the insurance industry or Republicans who still insist on cutting our revenue, they should be pressed for some cold, hard examples of exactly what spending they would cut. Force them to come up to the table and tell us what they would do.
Who gets the ax under a major tax cut for big business? Schools? Prisons? Health care? The DN just recently tried to blame Granholm once again for problems in the foster care system, complaining about funding cuts for programs, but what do you want to bet they will howl with outrage at this new proposal? (Hint: They have already started.)
It's put up or shut up time. Don't let the Pubs weasel away again. If they don't like this, they can propose an alternative. If they won't do that, the least they can do is stop complaining about cuts to revenue sharing, foster care, prison health care, schools, and all the other quality of life issues that have suffered under their pathological need to avoid paying for the world they live in.
EDIT 1:54 pm: Well, knock me over with a feather. This afternoon the DN actually sounds sane. Must be they got their prescription filled.
Gov. Jennifer Granholm's proposed new business tax is an improvement on the current Single Business Tax -- if for no other reason than it doesn't tax a firm's payroll.
But they challenge the legislature to change it, too.
But ultimately, the total tax burden for all companies doing business in Michigan remains the same. Is this enough of a change to make Michigan stand out as it vies with other states for economic growth?
Not really. But it's a good first step toward tax reform. It's up to the Legislature to tweak it now to make it enough of a change so that firms and investors will really notice a change in direction for Michigan.
Define "tweak". But at least the DN isn't going totally overboard with criticism. It's a good first step towards reality.