Legislative Priorities-Taxes

ISSUE:

Cost of Government

CHAMBER MEMBERS ADVOCATE:

That the appropriations process should not drive tax policy decisions.
Opposing tax or fee increases to balance the state budget.
Supporting efforts to improve government operational effectiveness.
Maintaining legislative oversight of state spending and user fees. The Michigan Chamber is opposed to constitutional or statutorily authorized automatic annual increases in state spending and user fees.
Providing working families and job providers tax relief that benefits a wide class of taxpayers.

WHY?

The Michigan Chamber strongly believes the best way to control the cost of government is to improve government efficiency, implement cost-saving reform measures and reduce spending, instead of new taxes, tax increases, or fees. Michigan continues to be uncompetitive in its business tax burden, specifically Michigan’s Single Business Tax and business personal property tax. Michigan must foster economic growth by allowing taxpayers to keep more of the money they earn and by providing a more competitive tax climate to encourage savings and investment.

ISSUE:

Business Tax Replacement of the Single Business Tax (SBT)

CHAMBER MEMBERS ADVOCATE:

Replacing the SBT with a combination broad-based, low-rate business income tax and business license tax, with a 50 percent personal property tax credit.
Providing a net business tax reduction of $500 million.

WHY?

According to the state’s own Michigan Department of Treasury Report, Michigan’s SBT still ranks 8th highest in state corporation taxes per capita when compared to corporate income taxes in other states. Michigan’s new business tax burden must be more competitive in order to encourage business investment, job retention, and job creation in the state of Michigan.

ISSUE:

Property Taxes

CHAMBER MEMBERS ADVOCATE:

Eliminating, or substantially reducing, the personal property tax.
Providing a 50 percent personal property tax credit as part of the SBT replacement.
Preserving, protecting, and expanding upon the reforms of Proposal A and the Headlee Amendment, and opposing measures that circumvent the intent of these voter-approved tax limitation amendments.
Requiring voter approval of certain local special assessments.
Annual or biennial updates to Michigan’s personal property tax depreciation tables.

WHY?

Michigan must make personal property tax relief a priority. This tax on business machinery and equipment, furnishings, and office equipment is an administrative burden and a disincentive to capital investment, job retention and job creation. In 2006, the Michigan Chamber endorsed a 50 percent personal property tax credit as part of a business replacement tax and continues to support this approach.

Proposal A has been largely successful in its two fundamental goals: reducing out-of-control property taxes for school operating purposes and narrowing the gap between low and high spending school districts. However, Michigan’s property tax burden remains high compared to other states. Michigan must not return to double-digit property tax increases by changing, or circumventing the intent of, Proposal A or the Headlee Amendment. Furthermore, the Headlee Blue Ribbon Commission examined the misuse of special assessments and recommended many of them be subject to various taxpayer protections.

ISSUE:

Sales, Use, and Excise Taxes

CHAMBER MEMBERS ADVOCATE:

Opposing any further increase in the sales, use, and excise tax rates on goods and services currently subject to tax.
Opposing the levying of sales, use or excise taxes by any local tax jurisdiction.
Opposing the levying of sales, use or excise taxes on any goods or services not currently subject to tax.
Legislation or administrative action to resolve numerous problems with implementation of the Streamlined Sales Tax Project and unreasonable audit practices.
Opposing efforts by the Michigan Department of Treasury to transition Michigan from a “vendor liability” state into a “consumer’s liability” state.
Supporting administrative or legislative changes to allow taxpayers to obtain refunds of overpaid sales tax from the state.

WHY?

Michigan’s sales tax continues to provide a substantial source of revenue to state government, especially since voters approved a 50 percent increase in the Michigan sales tax rate as part of Proposal A. The Michigan Chamber strongly believes that any increase in the sales tax rate, expansion of sales to services, or allowing local jurisdictions to levy sales, use or excise taxes will hurt our state’s economic competitiveness, encouraging individuals and job providers to purchase goods and services outside of Michigan. Furthermore, Michigan’s entry into the Streamlined Sales Tax Project must be continually monitored to ensure Michigan’s deductions, exemptions, and operational framework are not sacrificed in the name of nationwide uniformity and simplification.

ISSUE:

Unclaimed Property

CHAMBER MEMBERS ADVOCATE:

Supporting legislation to improve the state’s business climate by revising and updating Michigan’s Uniform Unclaimed Property Act.

WHY?

The tracking and reporting of unclaimed property requires a surprising and unreasonable amount of time and paperwork for Michigan’s job providers and represents a substantial hidden cost of doing business.

ISSUE:

Strengthening Taxpayer Rights

CHAMBER MEMBERS ADVOCATE:

Opposing retroactive tax increases resulting from law changes, changes in policy or court decisions.
Supporting a provision for interest to be paid on overpayments in the same manner and at the same rate as interest is currently assessed on underpayments.
Eliminating the requirement that taxpayers must pre-pay disputed non-property taxes if they are seeking redress in the Court of Claims.
Improving taxpayer access to the Department of Treasury policies and rules that generally communicate policy and statutory interpretations, and opportunities for interactive dialogue between Treasury and taxpayer advisory groups.
Opposing the use of third-party auditors, whether flat fee or contingent fee. The use of these types of auditors presents a conflict of interest, poses serious questions of confidentiality, due process and equal protection under law.
Allow taxpayers to settle tax disputes, including but not limited to mistakes, errors, and omissions, at the administrative level with appropriate safeguards, prior to going to court.

WHY?

Both the tax burden and the manner in which tax laws are enforced, are critical to improving Michigan’s competitive standing. Unfortunately, Michigan is often perceived as being a difficult tax “environment” within which to conduct business. This can negatively influence the decisions to locate, retain or expand jobs in Michigan. Removing obstacles to tax administration fosters compliance. Predictability and fairness are the backbone of a cooperative tax environment. The Michigan Chamber advocates for fair procedures and fair policy.

ISSUE:

Business Tax Replacement

CHAMBER MEMBERS ADVOCATE:

Business tax replacement should be accompanied by government restructuring, spending reform and efficiencies.
Any tax replacement discussion must be a deliberative process allowing for input from the business community.
Allowing appropriate time for employers to adapt their practices and procedures to cope with any new laws.
Opposing legislative expansion of local authority for new taxes.

WHY?

With the impending repeal and replacement of the SBT, Michigan must seek ways to enact cost-saving reform measures and pursue policy changes that. To ensure future fiscal responsibility, any tax replacement must result in a lower business tax burden and be accompanied by government restructuring. Furthermore, allowing taxpayers ample time to understand and respond to the financial implications of any major change in tax policy is critical to proper implementation and compliance.