PPT changes beneficial to Michigan
March 14, 2014
By Michael Marzano, Grassroots Coordinator & Policy Advisor for the Small Business Association of Michigan
There have been sweeping tax and regulatory reforms made over the last few years that have benefited job-creating local businesses across the state. But the recent changes in Michigan’s personal property tax (PPT) system will not only be beneficial to Michigan businesses but also Michigan communities as a whole.
Small businesses stand to benefit the most from the recent changes to the PPT. Currently, when a small business purchases a piece of equipment, like a camera or computer, it pays the normal six percent sales tax. But in addition, each year that the small business owns or leases that equipment it continues to pay personal property taxes on that same property for as long as it has possession. The elimination of the personal property tax ends this unfair double taxation that discouraged small businesses from providing quality jobs in their community and, worst case, forced some businesses to shut their doors for good.
Local communities around the state had concerns about the elimination of PPT. The PPT funds essential services like police, fire, jails, emergency services and schools. If we cut off the revenue stream to these services, communities will suffer. With the current proposal, though, that will not be the case. One hundred percent of the money for essential services will be funded to local communities and will be under local control. Even non-essential services, such as street cleaning and infrastructure funding, will still continue to be funded at 100 percent.
This might all sound great, but where is the money coming from to continue to fund these local services AND eliminate personal property tax for many of our Michigan small businesses? Instead of having to increase taxes on individuals, as some might think would be the case, this money is actually coming from business tax credits that were issued years ago that are up for expiration this year. The money used for these tax credits will go to fund the reimbursements to local governments for their provided community services instead of having to raise taxes on Michigan taxpayers.
At the end of the day, the bipartisan reforms made to PPT will benefit our communities by supporting our small businesses and ensuring that local governments are still able to provide services needed by their communities. The one last piece of this puzzle is that these changes must be approved by Michigan voters on Aug. 5. Voting “yes” on these measures will continue Michigan’s recovery and increase our economic competitiveness.