+EdwardGlen Posted January 23, 2011 Report Share Posted January 23, 2011 http://www.mlive.com/politics/index.ssf/2011/01/michigan_lawmakers_cant_kill_m.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+michigan-elections+%28Michigan+Elections+News%29 Business owners, many legislators and tax opponents roundly applauded Gov. Rick Snyder’s State of the State pledge to kill the Michigan Business Tax, but another disaster looms if any time lapses before Plan B is in place. “What you don’t want to do is eliminate the tax, then figure out how you’re going to replace it. That would be a bad strategy,” Business Leaders for Michigan President Doug Rothwell told editors of The Press on Thursday. The MBT, signed into law by Gov. Jennifer Granholm in 2007, levies a 4.95 percent tax on business income and a surcharge of 0.8 percent on gross receipts. The surcharge is especially despised, but a bill introduced by state Sen. Dave Hildenbrand, R-Lowell, and co-sponsored by the other 25 people in his GOP caucus, would throw out the entire MBT. That’s fine, as long as another plan is in place. As head of Snyder’s transition team and chairman of the Michigan Economic Development Corp., Rothwell understands the need to get it right this time. He recalls the tumultuous year between the Legislature’s scrapping of the similarly despised Single Business Tax in 2006 and subsequent implementation of the MBT. “There’s a word we keep talking about, and that’s ‘certainty.’ And business likes certainty,” Rothwell said. “We keep changing the business tax. We keep coming up with economic development strategy du jour. Stop it. “Do whatever it is we’re going to do and stick with it for a long-enough period of time so that business understands what this place is going to be like.” Hildenbrand’s opposition to the MBT has been consistent. He never liked the tax and voted against it when he was in the House. He wants it repealed so badly, he made it the first bill introduced in the new session Wednesday. But getting rid of the tax would take $2.2 billion from the 2012 budget. Part of Snyder’s solution involves implementing a 6 percent corporate income tax. While that proposal would increase the projected deficit even more, the governor has indicated cuts and other restructuring could make up the shortfall. Snyder has yet to embrace the Business Leaders’ major tax-restructuring policy, which calls for lowering the sales tax from 6 to 5.5 percent but spreading it to services. The governor has said an expansion of the sales tax to services is not on his radar, and Business Leaders board chairman David Joos also dismisses higher taxes as a solution. “I believe the state needs more revenue. The state needs to invest more in higher education, invest more in K-12, invest more in infrastructure, invest more in lots of things,” said Joos, president and chief executive of CMS Energy. “But it’s not going to achieve that by increasing tax rates. It’s going to achieve that by shrinking tax rates, becoming more competitive and getting more business investment. And I think we’re in a perfect position right now to make that all happen.” We can expect some clarity in February when Snyder will deliver an initial spending plan and work toward the goal outlined in his address to solidify a two-year budget by May 31. “I think he’s going to have to lay out in February exactly how this is going to work,” Rothwell said. “We don’t know ourselves right now exactly what the tax is going to be.” Grand Rapids Democratic Rep. Roy Schmidt speaks for many when he says he supports getting rid of the MBT surcharge. But he also agrees there needs to be a revenue plan in place if the MBT goes away. “With all due respect to my colleague, this has happened before,” said Schmidt, who served with Hildenbrand in the House. “Getting rid of a tax or program before having something in place can be a total debacle.” Also worth considering is that more than $750 million of the MBT — $500 per student — is earmarked for K-12 education. Then there also is the issue of about $600 million in tax credits built into the MBT. Chuck Hadden, head of the Michigan Manufacturers Association, said credits approved by lawmakers for producing batteries represent agreements between the state and the manufacturers. Battery producers and other business owners are making billions in investments in anticipation of the credits. Senate Majority Leader Randy Richardville said the bill to kill the MBT is a first step in the process. We can hope that suggests the process will include a proper exit strategy this time. “The bottom line is everybody hated the SBT,” said David Bowen, a certified public accountant at the Grand Rapids firm Mathieu and Bowen. Most of his clients do not like the MBT, either, he says. So what do they want? He echoes Rothwell with that word — “certainty.” Quote Link to comment Share on other sites More sharing options...
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