Background: The MBT surcharge represents a “band-aid” fix in a failed attempt to craft a competitive tax structure that morphed into a budget fix during a crisis. The surcharge covers a revenue gap created by the ill-conceived service tax which would have imposed a significant tax on purchasers of a vast list of business, as well as personal services. This anti-competitive policy error must be corrected by taking this $500 million burden off the backs of job providers, especially manufacturers who must compete on the basis of price in the global economy. Upon its creation, Michigan manufacturers bore a greater portion of the surcharge burden (about $100 million) as the MBT computation was also changed in a way that increased the effective tax rate on Michigan businesses, particularly manufacturing. Michigan businesses that purchased equipment, conducted product development research and paid significant wages and benefits in Michigan saw statutory credit rates and percentage changes during the services tax repeal. This insidious surcharge must be eliminated and the MBT research, investment and compensation credits restored or increased.

MMA Position: The MBT surcharge is a job killer. It must be eliminated.