NFIB

Michigan Business Tax fix moves out of committee
Yesterday NFIB testified in support of SB 1038, a bill that would remove all fees and taxes collected by a business for the state -- such as sales tax, tobacco tax, bottle deposits, etc. -- from the gross receipts base. Absent this change, businesses would be taxed on a tax in calculating their liability under the new Michigan Business Tax. The bill passed the Senate and has been in the House Tax Policy Committee where it has undergone revision. The bill was passed from the House committee late yesterday.

Another business tax hike to pay for the fix
However, part of the deal being worked out by Democrats in the House and Republicans in the Senate to pay for the measure (passage of the bill would reduce tax revenue by $150 million) is to get Senate Republicans to pass legislation that would decouple the MBT from provisions of the federal stimulus package that allows businesses to use an accelerated write-off of equipment purchases. This part of the federal stimulus package was strongly supported by NFIB at the federal level. By using this approach, many businesses that had counted on both a state and federal tax reduction for equipment investment will now see the state tax savings eliminated. It is estimated that this would result in a $92 million to $120 million tax increase on those businesses in order to fund the MBT gross receipts fix.

Wrong approach
Once again, one segment of the business community is being taxed to pay for tax relief for others. Rather than punish businesses that are investing in plant and equipment in order to fix a botched tax provision, the legislature would do better to repeal the ridiculous handout to the movie industry that cost about $130 million in the 2009 budget. That would fund most of gross receipts fix without punishing other job providers. Giving away the store to a narrow group of taxpayers at the expense of those who have been here year in and out supporting our state with jobs is just bad policy.