The Chairman and CEO of Ann Arbor venture capital firm Ardesta LLC, and newly elected Governor, Rick Snyder, had big plans for the state as a governor. Now his job is to turn these plans, such as putting in place a new budget system, into realities. One of the main things Snyder wants to do is eliminate the Michigan Business Tax, which was created in 2007 to replace the single business tax, and replace it with a flat rate 6% corporate income tax. Snyder says that the current tax hurts Michigan employers and puts the state at a competetive disadvantage, and that "simplifying and cutting taxese is a proven method to grow the economy and fuel job creation."
The new proposed tax is said to create a tax cut of $1.5 billion for Michigan employers. This money back is meant to restimulate the economy and increase jobs and wages for workers. A tax foundation study shows that every $1 reduction in corporate taxes, wages increase by $2.50 over the next 5 years.
On the down side, the plan is only said to raise a measly $700 million (compared to the MBT's $2.2 billion estimated last year). With an already crippling budget deficit of $1.8 billion, it doesnt seem like the new tax system will be gaining any revenue for the state. Snyder has said that he plans to stem the shortfalls by looking into the rising costs of public employee health and retirement plans..