2015 (Lansing) – The state’s leading small business organization,
the National Federation of Independent Business (NFIB), told
the House Appropriations Committee today that small business is paying the
lion’s share of the state’s business taxes.
“There has been
a myth promoted by the tax and spend crowd that small business is 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.”
Owens based
his conclusion on a study of Small Business Taxation released today by the
Anderson Economic Group. The study was commissioned by NFIB to examine small
business taxation in the state of Michigan in light of recent comments
concerning changes to the state’s Corporate Income Tax.
In his
testimony before the Committee, Owens cited a Detroit Free Press Editorial
Board interview with 2014 gubernatorial candidate Mark Schauer where Schauer voiced
concern that there are “95,000 businesses not paying the Corporate Income Tax”.
Owens also referenced a recent article in a Michigan Information and Research
Services (MIRS) publication where former House Fiscal Agency Analyst, Mitch
Bean, recommended “expanding the base” of the Corporate Income Tax to include
non-corporate (mostly small business).
“According
to this logic, a small business only pays taxes if they pay twice on the same
income – not once,” said Owens. “The
reason they are not paying the Corporate Income Tax is because they already
paid their business income taxes with their personal income taxes.”
Owens
pointed out that, according to the Anderson study, small businesses have paid
just over $800 million in taxes on business income through their personal
income tax returns in 2013 while a House Fiscal Agency report suggests 2014 revenue
from the Corporate Income Tax will only be between $183 or $328 Million because
of offsets from Michigan Economic Growth Authority (MEGA) credits.
“In other
words, while there is much talk about how small business isn’t paying their
fair share of business taxes the numbers show that small business is paying most
of the business taxes,” said Owens. “This is important for lawmakers and the
public to understand as past economic development program giveaways come home
to roost and budget pressures create a revenue fishing expedition atmosphere.”
“I can
promise you that very few, if any, of the small businesses paying that $800
million in taxes received any of the projected $9 billion in tax giveaways of
the past,” said Owens. “So we suggest lawmakers look elsewhere for revenue
enhancements and stop drinking the ‘small business is not paying any taxes’ Kool-Aid.”
