Governor Rick Snyder has proposed eliminating the Michigan Business Tax and replacing it with a flat 6 percent Corporate Income Tax. At that rate, the tax would be about a $1.6 billion tax cut from the current MBT. NFIB members were surveyed on the Governor’s tax plan in late 2010 and early 2011. A copy of the question and background material can be viewed HERE.
The returns are in and NFIB small business members have voted to support Governor Snyder’s proposal to dump the Michigan Business Tax and replace it with a flat rate six percent corporate income tax. 69 percent of members responding supported the corporate income tax proposal, 12 percent did not and the remaining 19 percent were undecided.
As proposed, the tax would only apply to those businesses that are “C” corporations. Many small businesses that are partnerships, sole proprietors, Sub S corporations, or LLC’s would be exempt from the tax and continue to pay their business taxes through the personal income tax. For many, this would end the “double taxation” that currently exists when a business has to pay business taxes through both the personal income tax and the Michigan Business Tax. For those small businesses that are “C” corporations, the gross receipts threshold of $350,000 and the alternative small business tax of 1.8 percent on income will still be included in the proposed corporate income tax. This makes the tax a very attractive alternative to the Michigan Business Tax for almost every small business in the state.
The state’s budget deficit for the 2012 fiscal year would be close to $3.1 billion if the Governor's proposed replacement of the Michigan Business Tax (MBT) with a six percent Corporate "C" business tax is passed by the legislature. The Governor has indicated that his budget proposal would address both the expected structural deficit of $1.5 billion for 2012 and the revenue shortfall of another $1.6 billion from making the move to the new business tax.
For more details on the Governor's budget proposal see the realted story HERE.