Guard Against Attempts to Change the New Corporate Income Tax

Date: December 02, 2015 Last Edit: January 05, 2016

Small Business Challenges in 2016

After more than 36 years of double taxation and punitive tax policy on small business, NFIB/Michigan was successful in leading the way to repeal the confiscatory Michigan Business Tax (MBT) and replace it with a flat rate Corporate Income Tax. The result is a $1.67 billion tax cut that primarily benefits small business.

Dumping the dreaded Michigan Business Tax (MBT) and replacing it with the new, small business friendly, Corporate Income Tax is a major victory for small business. However, special interests are already looking for ways to “tweak” the tax and expand the base (spread the tax to small businesses not now required to pay the tax) and/or raise the rate in order to increase revenue. Some have even suggested that small business isn’t paying its “fair share” because many do not pay the Corporate Income Tax – ignoring the fact that they pay their business tax through the personal income tax. They want to return to the MBT double taxation of small business profits. NFIB will be on guard against efforts like these.

A case in point is that gubernatorial candidate Mark Schauer claimed during his campaign for governor in 2014 that 95,000 small businesses were not paying taxes under the Corporate Income Tax. As any small business owner knows, that is because they are already paying their business tax under their personal income tax. Liberal tax and spenders believe that unless a small business owner pays twice on the same income they are not paying their "fair share". This kind of economic ignorance is behind efforts to double tax small business just as they were under the old Michigan Business Tax to finance big government spending.

In 2015 the same untrue refrain that "small business isn't paying its fair share" has been offered as justification for expanding the Corporate Income Tax to non C corporation businesses (mostly small business) in order to find funding for roads. To refute these myths about small business taxes, NFIB engaged the well renowned research firm of Anderson Economic Group to do a study that proves that small businesses is not only paying its fair share, they are paying MORE than double what larger businesses are paying under the CIT when tax credits from the old MBT are factored into the equation. See the study and conclusions HERE.

The latest attempt to change the Corporate Income Tax involves a petition drive effort by road construction labor unions to raise the state’s Corporate Income Tax rate from 6 percent to 11 percent in order to increase road funding. Although road funding has already been increased in 2015, the petition drive is still active and the tax and spend crowd is making new plans for the extra money if the tax hike is successful. The labor unions are hiding behind a front group they formed called “Citizens for Fair Taxes”. The group's plan is to conduct a petition drive to put the proposal before the Legislature. The Legislature would then have 40 days to respond to the proposal. With the current Republican control of the Legislature it is likely that the proposal would be voted down or not acted on, in which case the measure would go on the November 2016 ballot for voters to decide. If they succeed with this proposal, Michigan will have one of the highest corporate income tax rates in the country and the result will be less investment by business and a subsequent loss of jobs and opportunity for Michigan’s working families. NFIB will be working to defeat this proposal. Go HERE to read more about this development.

NFIB supports the original Corporate Income Tax proposal that has been passed into law and we will fight efforts to raise the rate or change the tax into another monster like the MBT it replaced.

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