April 24, 2017 (Lansing) – The state’s leading small business organization, the National Federation of Independent Business (NFIB), referred to a study released today to prove the point that small businesses are paying more than their fair share of taxes.
“There has been a myth that, because many small businesses that are not C corporations do not pay the state Corporate Income Tax (CIT), they are not paying any business taxes,” said NFIB State Director Charlie Owens. “The reality is that they are paying most of the business taxes in our state through their personal income tax.”
Owens based his conclusion on a 2017 Study of Business Taxation released today by the Anderson Economic Group. The study examines all of the taxes that businesses in the state are paying – not just the state’s Corporate Income Tax.
“What is so important about this report is that it examines the total taxes paid by Michigan business both large and small – rather than just focusing on a specific business tax alone,” said Owens. “Those that are looking for justification to increase taxes on job providers always point to the tax that is collecting less and ignoring other taxes where revenues are up – such as the taxes small business pays through the personal income tax”. The study shows that Michigan businesses paid $14.1 billion in state and local taxes in 2015, including property taxes, sales taxes and income taxes in addition to traditional business taxes.
Owens said the study shows that the amount small business pays via the personal income tax has increased substantially since 2011 from $464 million to $805 million in 2015. At the same time the revenue from the Corporate Income Tax has declined when netted against credits and grants still outstanding from the old Michigan Business Tax.
“This year when the Corporate Income Tax and Michigan Business Tax netted out to a decline in revenue that caused a downward adjustment to budget numbers – many claimed that business is not paying enough in taxes,” said Owens. “The fact is that we are still paying for the failed economic policies of the past as these tax handouts are cashed in today and small business is the sector picking up the slack.”
“I can promise you that very few, if any, of the small businesses that have paid over $800 million in personal income taxes received any of the projected $9 billion in tax giveaways of the past,” said Owens. “So we suggest lawmakers look elsewhere to solve their budget woes and stop drinking the ‘small business is not paying enough taxes Kool-Aid.”
