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Thursday, 09 February 2012 11:01

MMA sets sights on personal property tax

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MICHIGAN — Eliminating Michigan’s personal property tax has long been a high priority for business advocates in Lansing. This year, they may finally accomplish their goal.

Gov. Rick Snyder and legislative leaders in the state House and Senate, on the heels of last year’s elimination of the Michigan Business Tax and creation of a 6 percent corporate income tax, have made repeal of the personal property tax a top priority in 2012.

Mike Johnston“We’re very, very optimistic about it,” said Mike Johnston, VP of government affairs at the Michigan Manufacturers Association.

The association has made the personal property tax’s demise the top priority in its recently issued 2012 legislative agenda. Like other business advocates, the MMA argues that the tax poses a barrier to capital investments by manufacturers in the state.

Michigan is one of only a few states in the nation with a personal property tax, and it has a high rate among those that do have the tax, Johnston said. Indiana is the only neighboring state with a personal property tax, he said.

“You’re penalized on the investment,” Johnston said. “It stands as a stark competitive barrier to industrial investment in Michigan when the return on capital is cheaper in other states.”

At a time when Michigan’s economy, led by the manufacturing sector, is recovering after a decade of job losses, advocates say killing the personal property tax can further improve the state’s business climate – even if legislators craft a replacement.

“Repeal of the PPT would improve the state’s competitive position relative to other states, even if most of the lost revenues were replaced by other taxes,” states a November 2011 analysis of the personal property tax by the East Lansing-based Anderson Economic Group.

Contrary to other sectors, restructuring Michigan’s business taxes in 2011 did not benefit manufacturers, Johnston said. The new corporate income tax actually increased the tax burden for many manufacturers because it eliminated a 35 percent credit on the personal property tax, costing corporations about $137 million, according to the Anderson Economic Group.

Levied on industrial, commercial and utility property, the personal property tax generates about $1.2 billion annually in revenue for the state.

Repealing the tax has the strong support of other Lansing-based business groups such as the Michigan chapter of the National Federation of Independent Businesses and the Michigan Chamber of Commerce, which rank it as a top priority as well for 2012.

Rich Studley“If we are serious about making Michigan more competitive in the global economy, as well as in the Great Lakes region, it must be repealed,” Michigan Chamber CEO Rich Studley said.

Key to repeal, though, is doing it in a way that doesn’t harm counties, townships and cities that are already operating with stretched budgets.

The personal property tax in 2010 typically accounted for 6 percent of the tax revenue to cities and townships, according to the Anderson Economic Group’s summary. It generated more than 30 percent of revenue for 31 communities and more than 40 percent of revenue for eight communities, the report states.

The MMA hopes to work with legislators and its counterparts in Lansing, as well as groups representing local governments, to craft a personal property tax replacement that helps its members without hurting local governments, Johnston said.

“We are consumers of local services – roads, police and fire – so we want those local services, too,” he said. “We want to make sure the locals are comfortable with the plan.”

Bottom line, Johnston said, “Michigan has got to be more competitive. Doing nothing is not an option.

“The trend of doing nothing has not gone well.”

Beyond the personal property tax, the other top priorities in the MMA’s 2012 legislative agenda are:

  • Improving work force training. Despite the state’s high unemployment, there is a shortage of skilled workers for manufacturing skilled trades, Johnston said.

“There are jobs available. We just don’t have enough (qualified) people to fill them,” he said.

  • Opposing the adoption of new state regulations that exceed federal requirements.

Johnston cites, for instance, past consideration of an ergonomic regulation in Michigan that went beyond the federal rule. State lawmakers last year enacted legislation effectively kicking the effort.

“It’s an unnecessary and expensive burden that other states haven’t implemented,” Johnston said.

  • Opposing new mandates for employee health coverage.

That includes the efforts, supported by Gov. Snyder, to enact legislation to require health plans to cover autism care.

The MMA and other business groups oppose the effort, arguing that coverage mandates increase the cost of coverage.

“If government mandates too much coverage, the companies will not offer health care at all,” Johnston said.

  • Supporting the proposed New International Trade Crossing to Canada in Detroit.
Read 1596 times Last modified on Sunday, 12 August 2012 21:30

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