Taxation | SBAM on the Issues

Taxation

Taxation Principles

ABATEMENTS

SBAM adopts the following principles with regard to tax abatements:
  1. Abatements be restricted to businesses which create new jobs in Michigan, not more jobs from one Michigan community to another;
  2. Small businesses be eligible for the same abatements received by their competitors; and,
  3. Performance by the company receiving the abatement is reviewed, with the abatement being revoked if the company does not comply with the promised performance standards.
(LAC ANALYSIS 1989 – Property Tax) (ISSUES 9/1/92)

ALTERNATIVE MINIMUM TAX

SBAM opposes an Alternative Minimum Tax due to concerns that such a tax would discourage small business start-ups, discourage innovation, increase the barriers to starting a new business, make it more difficult for minorities and women to start businesses, and is a regressive tax which fails to consider ability to pay as criteria for fair taxation.  (LAC 1/15/91) (BOARD APPROVED 2/5/91)

ENVIRONMENTAL REMEDIATION CREDITS

SBAM supports an MBT credit for remediation to clean up environmental contamination.  The State Department of Environmental Quality must approve the remediation plan to qualify for the credit.  (LAC 2/8/95) (BOARD APPROVED 1/14/99)

ESTATE TAX

SBAM supports the permanent repeal of the federal and state estate taxes and retaining the step-up basis provision.

(LAC 6/02/08) (BOARD APPROVED 6/19/06)

FAIR TAX

SBAM supports a national fair tax.  This proposal is for a 23% national sales tax to replace the current federal income tax system. Several existing taxes would be eliminated including the individual income tax, payroll taxes, estate and gift taxes, self-employment tax and the corporate income tax.  Business to business transactions would be eliminated and good and services would be taxed at final consumption only.  
(LAC 12/2/98) (BOARD APPROVED 1/14/99)

FARMLAND


SBAM supports assessing agricultural property based on its use value.  (LAC 5/25/00) (BOARD APPROVED 6/28/01)

FEDERAL EXCISE TAX

SBAM supports the repeal of the 3% federal excise tax on telecommunications.
(LAC 5/25/00) (BOARD APPROVED 10/12/00)

“FEES” FOR GOVERNMENT SERVICES

SBAM considers “fees” for government services to be taxes, and urges lawmakers to review the cost/benefit ratio of any fee proposal.  (LAC 1/14/93)
(BOARD APPROVED 1/19/93)

GAS TAX

SBAM reaffirms support for an increase in the state gasoline tax provided that the majority of the revenue raised is dedicated to roads and bridges in the state.  Other elements of the position are:  1) Government immunity should be addressed to protect MDOT from excessive legal fees; and 2) Prior to any increase in the state gas tax, the issue of accountability must be addressed.  (LAC 4/9/97)
(BOARD APPROVED 6/12/97)

HISTORIC PRESERVATION TAX CREDIT

SBAM supports legislative efforts to create tax credits for the promotion of historic preservation.  Proponents say preservation efforts put people to work, restore a community’s tax base and use existing infrastructure.  (LAC 4/9/97)
(BOARD APPROVED 6/12/97)

INTERNET TAXATION

SBAM supports the US Supreme Court decision upholding Nexus and preventing states from enforcing state sales tax on out of state business.  SBAM supports existing use tax for out-of-state sales.  The burden is on the customer to pay the tax for out-of-state Internet sales.  SBAM supports a position of no new Internet taxation on the state and national level.  (LAC 5/25/00) (BOARD APPROVED 10/12/00)

LOCAL TAXES

SBAM opposes legislation that would allow or expand the ability of local government entities to increase taxes that would drive up the cost of doing business.  (LAC 6/1/09)  (BOARD APPROVED 6/18/09)

MICHIGAN BUSINESS TAX

SBAM Principles for Michigan Business Tax Reform  
  1. Michigan taxation should consider the overall tax burden and how federal, state and local taxes affect Michigan businesses.
  2. Michigan’s tax system should encourage growth and attraction of small businesses in Michigan.  
  3. Taxes should be imposed on an individual or business entity only once.  
  4. The business taxation system should be predictable to allow for advance planning of tax expenses. 
  5. Opposes a state sales tax on services until such time as Michigan adopts sales as the predominant basis for taxation.   
  6. Business to business transactions should be exempt from sales tax.   
  7. The fairest system of taxation is a consumption-based system that taxes goods and services only once and at the point of sale to the consumer.  
  8. The Second fairest taxation system is profits.  
  9. SBAM opposes gross receipts as the sole basis for taxation.     
  10. The overall tax system should position Michigan businesses to compete effectively in an ever-changing global marketplace.   
  11. The tax system should entice and encourage entrepreneurial business start-ups.  Therefore, new businesses should have any tax liability phased in over the first 3 years of existence.
  12. Recognizing the need for state government to stabilize sources of revenue, a solid financial formula should be established to place money into Michigan Budget Stabilization Fund during economic expansions to provide for appropriate withdrawals during economic downturns.  
  13. State government must maintain long-term solvency of the Michigan Budget Stabilization Fund.  
(Approved by the SBAM Board, January 24, 2007)

MBT SURCHARGE


SBAM opposes the surcharge placed on the Michigan Business Tax and we urge that it be repealed.  If the legislature chooses not to repeal, strong consideration should be given to reducing the rate until it is repealed.  (LAC 1/14/08) (BOARD APPROVED 1/24/08)

CORPORATE INCOME TAX

SBAM supports the concept of moving to a Corporate Income Tax as Michigan’s primary business tax.  (LAC 2/14/2011)  (BOARD APPROVED 2/22/2011)

OFFICER COMPENSATION

SBAM opposes officer compensation being used as part of any definition of small business for the purposes of determining who qualifies for the small business alternative tax. (LAC 1/14/08) (BOARD APPROVED 1/24/08)

PHONE TAX

SBAM opposes any effort to increase taxes on phone lines. (LAC APPROVED 10/08/07) (BOARD APPROVED 10/26/07)

PROFESSIONAL EMPLOYER ORGANIZATIONS

SBAM opposes legislation which would limit PEO’s or other businesses in reducing their tax burden.  (LAC 6/17/04) (BOARD APPROVED 6/24/04)

SBAM supports legislation that prevents a company from forming or restructuring a business entity solely to evade payment of taxes. Efforts should be taken not to unduly restrict business formations or restructuring for other legal purposes. The burden of proof for a violation should be the responsibility of the Unemployment Insurance Agency. (LAC 10/13/04) (BOARD APPROVED 10/29/04)

PROPERTY TAX RELIEF

SBAM supports the total elimination of the personal property tax.  If total elimination of the tax without revenue replacement is not feasible, SBAM rejects the suggestion that personal property tax assessments be treated differently between manufacturing and non-manufacturing sectors.  Also, increase the personal property tax exemption to a minimum of $100,000 SEV, and allow local municipalities the option of not assessing or collecting the personal property tax.  An MBT credit against personal property taxes paid is not an acceptable alternative to eliminating the personal property tax.  (TAX 1/17/96) (LAC 2/16/96) (BOARD APPROVED 3/14/96)

R&D CREDITS

SBAM supports providing an MBT credit for research and development.  
(SBAM Action Agenda 2/88)

SALES TAX

SBAM opposes allowing a sales tax on services. (LAC ANALYSIS 3/9/98)

SBAM supports a constitutional amendment to prohibit sales tax on services.
(ISSUES 91/92)

SUPERMAJORITY

SBAM supports efforts requiring a supermajority vote of the legislature to raise, expand the base, reduce or eliminate exemptions or credits to each of the four taxes.  
(TAX 4/20/98) (LAC 5/7/98) (BOARD APPROVED 7/9/98)

TAX CREDITS


SBAM continues to be a strong advocate for broad-based tax relief for all small businesses. However, SBAM is opposed to any new, company-specific tax incentives (credits, deductions, exemptions, exclusions) until the MBT surcharge is repealed.  
(LAC 1/05/09)  (BOARD APPROVED 1/22/09)

TRASH TAX

SBAM opposes the imposition of any increased surcharge/tax that is assessed on landfills. (LAC 1/11/2010) (BOARD APPROVED 1/21/2010)