Michigan voters put the final stamp of approval on reforms to the business Personal Property Tax
Michigan voters put the final stamp of approval on reforms to the business Personal Property Tax with the passage of Proposal 1 on the primary election ballot.
As a result of the Proposal 1 victory:
- Starting in the 2014, business owners with commercial personal property (mostly small business) with less than $80,000 True Cash Value in total commercial or industrial personal property in any one jurisdiction would not have to pay any personal property tax to that jurisdiction.
- The legislation will phase out the industrial portion of the tax over six years beginning in 2016 (from 2016-2022).
- All industrial personal property purchased after 2011 would become exempt in fiscal year 2015-16. Then industrial personal property would become exempt as it reaches 10 years old beginning in fiscal year 2015-16.
Small business owners that missed the 2014 deadline to get the exemption on commercial property less than $80,000 will have another opportunity in early 2015 to file for the exemption.
NFIB supported reforms to the Personal Property Tax passed in 2012 still required a statewide vote of the people on the 2014 primary election in order to finalize the structure for implementing the tax cuts. If voters had not approved Proposal 1, then the entire Personal Property Tax Reform effort would have failed and we would be right back where we started.
The Personal Property Tax is a levy on equipment, furniture, tools, computers etc. used by business in their operations. While both businesses and individuals pay real property taxes, in Michigan, only businesses pay the personal property tax (PPT). Many states that compete with Michigan for jobs have eliminated their Personal Property Tax.
While getting rid of the job killing Michigan Business Tax (MBT) and replacing it with the new Corporate Income Tax was a major boost for small business in Michigan, the Personal Property Tax remained a serious disincentive for investment and job growth. NFIB worked with the legislature and Governor Snyder to find a way to eliminate this tax and on the last day of the 2012 Lame Duck session, legislation implementing NFIB supported reforms to the Personal Property Tax were passed. Passage of Proposal 1 is the last piece of the puzzle in making these reforms reality for Michigan business owners.
Combined with the recent move away from the Michigan Business Tax to the new Corporate Income Tax these Personal Property Tax reforms will give our state a powerful one-two punch in the competition for jobs.