Background: MMA suggests several specific program changes and approaches to tax policy development:

• Prohibit the Michigan Department of Treasury from issuing administrative rules and other guidance that impose retroactive requirements.
• Rescind the October 2009 “Notice to Taxpayers Regarding Federally Disregarded Entities and the Michigan Business Tax.” This notice only adds to the compliance burden and does nothing to assist in administration and collection of tax revenues.
• Improve the efficiency and professionalism of economic development program audits.
• The Department should adopt a “customer-service,” rather than adversarial, attitude toward taxpayers.
• Policymakers should consider any tax proposal in a dynamic, rather than static, economic forecasting model. The impacts of taxpayer behavior in reaction to tax or economic development policy changes play an important role in terms of actual revenue collected. Dynamic forecasting could help avoid the trap of thinking about tax policy in the contorted constraints of terms like tax expenditures, causing policymakers to be uninformed about the actual economic impact of incentives and other tax policy changes. For example, dynamic forecasting may demonstrate that not offering economic incentives will cause even greater revenue loss as jobs and investments are lost to other states and nations.
• Lock in the cost-saving and streamlined administrative process created in 2010 for the approval process for the property tax treatment of pollution control equipment by encouraging the State Tax Commission and the environmental agency to formalize their agreement.

MMA Position: These are several specific actions the new administration and legislators can take to improve the tax regulatory environment.