Economic Development & Tax

Economic Development & Tax

Create a Climate for Growth and Investment

Small businesses account for nearly half of all private sector jobs in the state of Michigan. To ensure the continued success and future growth of Michigan’s economy, lawmakers must guarantee that the state’s tax structure and economic development strategy support, not hinder, small businesses. To promote economic growth and prosperity while cultivating an environment friendly to entrepreneurs and innovation, Michigan’s policies should support homegrown business expansion, attract entrepreneurs, and instill a simple, yet equitable taxation system.

Invest in Michigan’s Economy from the Ground Up

While every lawmaker will claim “small businesses are the backbone of the economy”, Michigan’s homegrown small businesses are the first to be overlooked in conversations on economic development.

SBAM supports an economic development strategy that promotes economic gardening through building an environment supportive of entrepreneurs and second-stage businesses.
SBAM believes that small business should be a central part of Michigan’s economic development strategy. Small business should remain a part of Michigan Strategic Fund’s mission and should continue to have a seat at the table of the Michigan Economic Development Corporation.

Responsible Tax Incentives

Tax incentives can be a helpful tool to support economic growth when used wisely, and when they do not come at the expense or neglect of second-stage small businesses.

Credits and abatements should be made available to small and large sized businesses alike.
Incentive dollars should follow benchmark achievement to ensure tangible investment.
Incentives should not be used to shift jobs from one Michigan community to another.

Support a Tax Code That Works for Small Business

Michigan’s tax code should reward risk, investment, and job creation. When making business taxation decisions, policymakers should consider the overall tax burden faced by small businesses, and support simple, equitable tax systems.

Income should only be taxed once, and gross receipts should never be used as the basis for taxation.
To ensure that businesses can plan, they need a predictable business tax system, and changes must be clear and transparent.
Business taxes should be levied uniformly at the state level, not through a patchwork of inconsistent local ordinances.
To ensure Michigan’s world-class small businesses can compete in the national and global marketplace, Michigan should strive to be a Top 10 state in the Tax Foundation’s Business Tax Climate Index.

Tax Policy Task Force Report

2025 Tax Foundation State Tax Competitiveness Index

Category	Rank
Overall	14
Corporate Taxes	9
Individual Income Taxes	14
Sales Taxes	12
Property Taxes	28
Unemployment Insurance Taxes	26

Property Tax

Real estate should be assessed on true cash value using traditional valuation methods.
Use of intangible valuations factors artificially inflate property values, and thus taxes on businesses.
Personal property tax classifications should be based on how equipment is used, not how the property is zoned.
SBAM also supports the gradual phase-out of the commercial personal property tax to align it with the exemption already granted for industrial property.

Sales & Use Tax

Michigan’s sales tax must not be expanded to include business-to-business transactions, which leads to tax pyramiding.
The sales tax should also not be extended further to encompass services.
Sales and Use taxes should be applied uniformly to in-person and online sales.

Individual Income Tax

Most small businesses are pass-through entities, meaning main business tax is Michigan’s Individual Income Tax.

Michigan’s policies must reflect this by maintaining a competitive, flat-rate Individual Income Tax. Pass-through income should not be subject to any additional taxes.
To avoid penalizing small businesses who operate in multiple states, apportionment should be aligned for pass-throughs and corporations alike.

Unemployment Insurance

Michigan’s unemployment insurance system is funded entirely by employers through a payroll tax. In the face of workforce shortages and economic uncertainty, policymakers should avoid irresponsible benefit increases, and support policies that promote stability within the system. SBAM promotes efforts that prioritize fraud prevention within the system and ensure solvency of the UI Trust Fund.

UIA Task Force Report