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Granholm Says Michigan Business Tax Right Tax for Michigan .(MP3- 3MB)

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My proposed Michigan Business Tax (MBT) plan to replace the out-going Single Business Tax (SBT) will make Michigan’s business climate more competitive and will ensure that funding will be available for critical programs, including public education, health care, and public safety.

The Michigan Business Tax is a win-win, because it’s a competitive, pro-growth tax that will benefit more than three-fourths of Michigan businesses. Under the proposal, 77 percent of businesses will pay less taxes and in addition, the plan will provide a $150 million tax cut.

The MBT is based on the following principles:

• Creates a business tax with the broadest base and the lowest tax rate possible
  The MBT has three components in the base: gross receipts, assets that will be taxed at 0.125 percent, and business income which will be taxed at 1.875 percent. These rates are among the lowest in the nation and well below the current SBT rate.

• Benefits the most businesses
  The apportionment formula under the MBT is based 100 percent on a firm’s percentage of Michigan sales compared to the current SBT which is based 92.5 percent on sales and 3.75 percent each on the percentage of payroll and property.

• Michigan businesses will receive a $150 million tax cut. Seventy-seven percent of Michigan businesses will pay less under the MBT – a higher percentage than under any current public plan.

• Provides substantial personal property tax relief to industrial and commercial taxpayers
  Industrial and commercial businesses will receive a 46 percent personal property tax cut.

• Eliminates the tax on payroll, benefits, and health care
  Wages and benefits, including health care, are not part of MBT’s base.

• Ensures revenue neutrality to protect citizens from higher taxes or huge cuts in education, health care, or public safety
  The MBT raises the same amount of revenue as the current tax to protect education, health care, and public safety from devastating cuts, while preserving the $600 million in tax cuts that start taking effect this year.

• Helps small businesses
  Businesses with less than $350,000 in gross receipts are not subject to taxation. The MBT is phased in for companies with gross receipts between $350,000 and $700,000 to eliminate the “cliff” effect in the current law. Small businesses may also choose to pay an alternative tax of 1.8 percent of adjusted business income.

• Helps high tech companies
  Technology companies that form the heart of the 21st Century Jobs Fund will receive a $125 million tax cut. Five of every six companies in these sectors will benefit. In addition, the MBT creates a new MEGA credit to encourage research and development innovation in Michigan.

• Protects economic development tools
  MBT retains the current MEGA compensation credit as well as the MEGA credit for high tech jobs, brownfield tax credits, historic preservation credits, and Renaissance Zones.

For more information, click here.