Senate approves reform of job-killing personal property tax

LANSING— Legislation to eliminate the personal property tax (PPT) for Michigan small businesses was approved by the Michigan Senate on Thursday, said Sen. Darwin Booher.

“This reform is about helping to create jobs by making Michigan competitive and attractive to entrepreneurs,” said Booher, R-Evart. “Small businesses are the heart and soul of our economy, creating more than 70 percent of all Michigan jobs. This reform is focused first on spurring small business growth and job creation. That is why the first reform to take effect will be to eliminate this tax on small commercial businesses, like restaurants and mom-and-pop stores.”

Beginning in 2013, Senate Bill 1070 would exempt all industrial and commercial businesses from having to pay the tax or file a return as long as their personal property has a taxable-value of less than $40,000. Booher noted that this is not to be confused with real estate property taxes, but addresses personal property taxes businesses pay year after year on items like equipment, office furniture and supplies.

“This is also about fairness for Michigan’s small businesses,” Booher said. “The vast majority of those affected by this reform are the locally owned small businesses that stayed in Michigan and sacrificed to make ends meet and keep the doors open. These family operations are not eligible for any breaks and currently pay the full burden of the PPT.”

According to the Anderson Economic Group, in 2013 state and local governments will save more than $12 million in costs under the small business exemption in SB 1070.

“Exempting these small businesses will reduce the number of personal property tax fillings by up to 80 percent,” Booher said. “That means less paperwork for job providers and less administrative costs for local governments. Businesses and state and local units will eventually save more than $200 million each year in compliance costs as a result of this reform. That is $200 million in bureaucratic paperwork that could be used to expand a business or be invested in local priorities like road maintenance or public safety improvements.”

The remaining bills in the personal property tax reform package deal with phasing out industrial and manufacturing personal property starting in 2016 and replacing lost tax revenue to local governments. Senate Bill 1072 would create a personal property reimbursement fund, to be funded from increased state revenues due to the expiration of tax credits. If the state fails to deliver on replacement revenue for local governments, the reform is automatically repealed.

“This reform is designed to help boost economic growth and job creation,” Booher said. “This is about rejecting the status quo that failed the state for a decade and adopting a new strategy to help energize our economy and spur job creation.”

SBs 1065-1072 now head to the House of Representatives for consideration.