Small Business Disappointed with Governor's Budget Proposal

Date: March 05, 2019

Governor Proposes New Tax on Small Business

 

LANSING, March 5, 2019 –The state’s leading small business advocate, NFIB, reacted with disappointment today to Governor Gretchen Whitmer’s budget presentation before a joint House and Senate appropriations committee. In her budget proposal, the Governor proposed expanding the Corporate Income Tax to include Sub S corporations and other non-C corporate entities such as partnerships, LLC’s, and sole proprietorships. These types of businesses are typically referred to as “pass through” entities because they pay their business taxes through their personal income tax.

 

“The Governor expressed a desire to ‘level the playing field’ for small business in her State of the State address,” said NFIB State Director in Michigan, Charlie Owens. “We fail to see how raising taxes on small business to fund a tax handout to government employees is consistent with that goal.”

 

Owens said the move to apply the six percent Corporate Income Tax rate to pass through businesses is a move towards bringing back the confiscatory tax policies of the past that included the Single Business Tax and the Michigan Business Tax. Owens also noted that the governor made it clear in her budget presentation that the revenue from the extra taxes on small business would be used to restore an income tax exemption for government employee pensions. “Sub S corporations and other non-C corporate entities such as partnerships, LLC’s, and sole proprietorships, currently pay their business taxes through the Personal Income Tax,” said Owens. “The move to expand the Corporate Income Tax rate to these businesses to subsidize a government employee tax break is unacceptable.”

 

Owens pointed to a recent Anderson Economic Group study that showed individual income tax revenue from sole proprietorships, partnerships, and subchapter S corporations, is up 81% in five years and has more than doubled from $400 million to over $800 million since 2010. “Small businesses are already paying more than their fair share of taxes in this state,” said Owens.

 

Governor Whitmer also proposed more than doubling the tax on gasoline when the sales tax is figured into the formula. The move would make Michigan’s gasoline tax the highest in the country.

 

Owens said that NFIB would survey its members on the details of that gas tax proposal but also pointed out that NFIB members did not support the 2015 Proposal 1 road funding plan that attempted to raise a similar amount of revenue. The proposal was soundly defeated in a statewide ballot vote.

 

“We understand that the budget is a process and, while we are disappointed with the Governor’s initial proposal, we look forward to working toward a practical budget that moves our state forward,” said Owens.

 

Related Content: Small Business News | Michigan | taxes

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