LANSING – House Democrats won a huge victory for Michigan's business community on Wednesday when the House and the Senate reached an agreement on the Michigan Business Tax, a comprehensive solution to replacing the Single Business Tax that rewards investment, protects Michigan-based companies, and safeguards funding for education, health care, and police and fire protection.
"A comprehensive replacement for the Single Business Tax is the key to moving Michigan forward," said State Representative Joan Bauer (D-Lansing). "The new Michigan Business Tax rewards companies that invest in Michigan and create good-paying jobs for our workers. This is exactly what we need to get Michigan's economy back on track."
Under the agreement reached this week, about 75 percent of businesses in Michigan would pay less in taxes under the Michigan Business Tax (MBT). It is the only plan of its kind to address both the Personal Property Tax and the Single Business Tax (SBT) in such a far-reaching manner.
The House Democrats' MBT plan will:
- Provide over $600 million in new tax credits that reward Michigan businesses for investment, compensation, and research and development.
- Reward capital investment by cutting the Personal Property Tax by an average of
67 percent for manufacturers and 23 percent for commercial businesses, while also protecting funding for local units of government. - Boost job creation by providing credits for investment in Michigan and for Michigan payroll.
- Help small businesses by exempting companies with less than $350,000 in gross receipts from taxation. Businesses with up to $20 million in gross receipts will pay reduced rates. The plan also enhances existing small-business tax credits.
- Protect education, health care, police and fire protection, and other essential services by ensuring revenue-neutrality.
In developing the tax reform legislation, House lawmakers consulted with a variety of leaders from the public and private sectors, including tax experts, small business leaders, local government, the nonprofit community, organized labor and many others. The result is a comprehensive package that incorporates elements from the plans offered by Governor Jennifer M. Granholm, the State Senate, the Michigan Chamber of Commerce, the Grand Rapids Chamber of Commerce and others.
"This new business tax will give businesses an incentive to relocate in Michigan, which will give our economy a much-needed boost," Bauer said. "This plan will help jumpstart our economy while at the same time protect vital services such as education, health care and police and fire protection from devastating cuts. This is a victory for Michigan."