In a state that relies heavily on the manufacturing sector as one of its greatest sources of revenue, Michigan manufacturers are saying that the tax burden they must bear in this state is too great. A recent study by the Michigan Manufacturers Association (MMA) shows that on average in the state of Michigan, manufacturers pay about 29 percent more than the national average and within the state manufacturers pay roughly 45 percent more than other Michigan industries. Along with the release of this study, members of the MMA are asking Michigan to take a look at the tax system that is currently being used for businesses and manufacturers and make sure that the tax rate, especially on personal property taxes is fair and competitive to those of other businesses.
While the MMA acknowledges that these taxes bring revenue to the government, they also argue that the tax rate needs to be competitive to other states. This “heavy burden placed on the largest sector of the economy” is not fair and keeps hindering manufacturers according to the MMA’s director of government affairs, Michael Johnston. In an effort to help these manufacturers, the MMA has asked that the state, among other things, eliminate the personal property tax, eliminate parts of the Michigan Business Tax (MBT) such as the 22 percent surcharge and the tax on gross receipts, and continue tax breaks for businesses moving to Michigan in order to attract more revenue for the state.
Governor Rick Snyder has called for an end to the aforementioned MBT and plans to replace it with a 6% flat tax that would keep some of the corporations in this state that file federal corporate income tax forms exempt from this new tax. This plan is still in debate in Lansing and has been met with some criticisms, but Johnston also argues that there needs to be reductions in the property tax to make an impact on manufacturers.
At the same time, the leaders of the MMA understand that Michigan must be kept at a competitive level with other states and actually are calling for Snyder to keep those incentives that Michigan offers to out of state businesses. The most important thing is that other states still must be attracted to Michigan because of the competitive rates we offer. Snyder’s proposal is focused on not increasing the size of incentives to give to other businesses, but instead lowering the tax structure right here in Michigan so we can allow current businesses to prosper again. The MMA has not directly supported Snyder’s new policy, but this could be the first step in their search for more fair competition in the state of Michigan.