|
|
Michigan Manufacturing Insight |
Michigan Manufacturing Agenda |
E-Pubs Signup |
|
Capitol Report |
HR Report |
Environmental Report |
Health and Safety Report |
|
Technology Report |
MMA Articles |
GLMC Michigan Focus |
Employer Handbook |
Advertising |
|
Workers’ Compensation 101 |
Posting Requirements |
Retention Guidelines |
Speakers Bureau |
MiBiz
Governor’s Jobs and Investment Plan: A Breakthrough for Michigan Manufacturing
3/15/2005
For many years, the Single Business Tax (SBT) has been the primary method the state has employed to collect tax revenue from Michigan businesses. In its original form, it was intended to replace an out-of-date system of tax collection that did not reflect the realities of doing business at the time.
 But in the competitive environment of 2005, the SBT has grown to become an even more burdensome weight on Michigan business — so much so that Michigan was rated the ninth highest-cost state in the nation in which to do business.
Quite simply, Michigan cannot afford to lose more investment, more well-paying jobs and more research and development opportunities to other states and to global competitors through uncompetitive tax policy.
To her credit, Gov. Jennifer Granholm, along with State Treasurer Jay Rising, has recognized the need to strongly support the Michigan manufacturing industry and have put forward the “Michigan Jobs and Investment Act,” a blueprint for providing direct, effective reform of the SBT and ensuring Michigan’s continued competitiveness in the national and global marketplace.
The governor’s proposal includes these key elements:
- Reducing the SBT rate from 1.9 percent to 1.2 percent — a 37-percent reduction;
- Creating a 35-percent manufacturing and R&D Personal Property Tax credit;
- Reducing the alternative tax rate for small businesses from 2.0 percent to 1.2 percent — a 40-percent reduction;
- Creating an R&D tax credit.
“Small businesses create jobs from Main Street to Automation Alley,” Gov. Granholm said about the proposal. “This proposal slashes state business taxes for our entrepreneurs and store owners, providing a savings that they can invest in their businesses to grow more jobs here.”
David Cole, chairman of the Center for Automotive Research, calls these proposals consistent with the massive changes that are occurring in the business model of Michigan’s manufacturing sector.
“In effect, this is a new pattern for tax policy that is consistent with being a full partner with the auto industry as it shifts to a new business model that emphasizes competition on a global basis,” he said.
Some elements of the plan have raised concern from different segments of the business community, such as the 2.0-percent premiums tax on insurance companies. This tax, while a change from the current level, simply brings Michigan more into line with the level of taxation imposed by other states.
The SBT currently stands as an impediment to manufacturers creating well-paying jobs in Michigan. MMA believes that the governor’s proposal is fair, as 77 percent of businesses will receive a tax cut, and will encourage Michigan manufacturers to reinvest in their companies. That investment will enable the manufacturing sector, which generates more than $74 billion (one-quarter, the largest share) of Michigan’s Gross State Product, to continue as a core component of the state’s economy.
By creating a tax credit for R&D, the proposal unleashes a current of new investment that can drive innovation into emerging sectors of technology, such as fuel cell and alternative energy research, telecommunications and life sciences. Michigan has already made great strides in these sectors, and promoting further R&D expansion through this expanded tax credit can free up the essential venture capital so necessary for early- and middle-stage companies to bring cutting-edge research to market.
There is concern from some within Lansing circles that the governor’s proposal favors manufacturing to the exclusion of other industries. The SBT tax reduction will lower tax liability for 77 percent of Michigan businesses … that would hardly qualify as “favoritism.” Moreover, for every dollar that manufacturing generates, another $1.45 is generated in additional impact in the overall economy. Thus, ensuring manufacturing’s continued viability in Michigan is sound policy for the state, and MMA believes the governor’s Jobs and Investment Act reflects a balanced framework for the Legislature to consider in providing real impact to spur economic recovery for Michigan.
The Legislature needs to carefully consider Gov. Granholm’s proposals and evaluate them in light of an overall approach to reducing business taxes. MMA is ready to engage in meaningful dialogue with senators and representatives, as well as state policymakers, to arrive at a solution that advances Michigan’s economy and ensures the health and strength of the state’s manufacturing industry.
Chuck Hadden is vice president of government affairs for the Michigan Manufacturers Association, an advocacy organization representing manufacturers statewide.
Back
|
