Sen. Richardville: Historic agreement reached for SBT replacement
LANSING - Sen. Randy Richardville, R-Monroe, issued the following statement in response to the historic agreement that establishes the Michigan Business Tax, based upon a conference committee report, as a replacement for the Single Business Tax:
"The Senate has continually worked with the House and administration to develop a fair and reasonable replacement for the SBT. We have spent hours gaining feedback from small businesses and large companies across the state.
"The Michigan Business Tax is a fair, equitable tax structure that will allow companies to expand and encourage new economic development in Michigan. It will make Michigan more competitive and will help attract businesses.
"I am confident that this legislation will help businesses owners as they begin to plan for the coming tax year. It is a step in the right direction that will offer relief to businesses of all sizes in Michigan."
Highlights of the new MBT include:
* Stimulates and grows Michigan's economy by creating a new business tax structure and replacing the onerous Single Business Tax.
* Includes a combination of a modified gross receipts tax - rate of .80 percent; and a business income tax - rate of 4.95 percent.
* Taxpayers with gross receipts under $20 million will see a substantial tax reduction.
* The Michigan Entrepreneurial Exemption (ME-2) credit affords a 100-percent credit for firms under $25 million in gross receipts, and that add jobs and invest in Michigan.
* The manufacturing sector receives substantial relief with a 65-percent reduction in personal property taxes and commercial firms and telecommunications firms will receive a 23-percent tax reduction.
* Local units of government and public schools are held harmless.
* Construction firms and general contractors can deduct payments to subcontractors, which overcomes problems caused by cascading that are particularly acute for this industry.
* Flow-through entities, LLCs etc., are granted a specialized treatment to address problems created by the relatively high rate of the business income tax.
Further details:
* Revenue neutral with a trigger to both reimburse taxpayers on a pro-rata basis, 50-percent of any excess over 5 percent of estimated revenues, and to reinforce the Budget Stabilization Fund, also 50 percent of any excess over 5 percent.
* Raises about $2.5 billion in revenue with just under $500 million being deposited into the School Aid Fund to reimburse the K-12 system for the loss of revenue caused by the personal property tax exemption for industrial personal property.
* The plan includes all tax credits put forth by the House of Representatives, albeit at slightly lower rates. It includes substantial credits for research and development, compensation, investment (through an investment tax credit) and personal property.
Posted: Thursday, June 28, 2007
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