LANSING, Mich.– Legislation phasing out the personal property tax (PPT) on equipment and machinery owned by Michigan businesses has been approved by the state Senate.
“These bills begin the process of eliminating a tax that punishes job creators for investing in new equipment and expansion projects,” said Sen. Mike Green, R-Mayville. “It’s a job-killer. Michigan is one of only two states in the Midwest that still rely on this tax. If we are to be competitive with the rest of the nation for jobs, the PPT has to go.”
The reform package, Senate Bills 1065-1072, provides immediate relief for the smallest businesses while also beginning the phase-out process for manufacturers.
The bills shield homeowners from property tax increases by providing 100% protection of voter-approved millages for bonded debt from a decline in revenue as the PPT comes to an end. Local units of governments will also be eligible for reimbursement of other lost revenue.
Under the reforms, companies that own wind turbine infrastructure will still be required to pay the PPT.
“This legislation balances the need to create a pro-jobs and pro-growth atmosphere in our state with the importance of providing financial certainty to local governments,” explained Green. “I believe these reforms will fuel Michigan’s economic recovery, which will mean new and growing businesses, jobs for workers and eventual growth in local revenue.”
The eight-bill package would alter the personal property tax in the following ways:
• Effective Dec. 31, 2012 any commercial or industrial businesses that have personal property valued at $40,000 or less will not pay taxes and will not file a return. This would eliminate 75-80 percent of returns that currently need to be filed.
• Effective Dec. 31, 2015 all eligible industrial personal property bought after December 31, 2011 will not be taxable.
• Effective Dec. 31, 2015 any eligible personal property that is 10 years old will no longer be taxed. This will continue each year until all property is tax exempt.
SBs 1065-1072 now advance to the Michigan House of Representatives for further consideration.