Michigan Finally Has a Structure in Place to Begin Reducing the PPT

December 17, 2012

Monday, Dec. 17, 2012 - Good News! On the last night of the Lame Duck session, the Michigan Legislature finalized legislation to begin phase-out of the much-maligned business personal property tax (PPT.) The Michigan Chamber views elimination of the PPT for all business taxpayers as a top legislative priority.
 
While the package of bills passed last week initially applies primarily to small business owners and industrial taxpayers, we view this package as a significant breakthrough and meaningful first step forward; Michigan finally has a structure in place to begin reducing this tax, while maintaining revenues to local governments who depend on the PPT to run daily operations.
 
The Michigan Chamber applauds Lieutenant Governor Calley, Senate Majority Leader Randy Richardville, and Speaker Jase Bolger for their leadership on this important business climate issue!
 
Highlights of the package include:

  • Beginning in 2014, small commercial and industrial business owners with less than $40,000 in taxable value property per jurisdiction will be exempt from the PPT.
  • Beginning in 2016, new industrial personal property purchased in 2013, 2014, 2015 or after is exempt.
  • Beginning 2016, previously existing industrial personal property which is 10 years or older is exempt.
  • Expiring business tax credits would be used to reimburse local governments for approximately 80% of the revenue loss associated with the tax relief, 100% for the School Aid Fund, and 100% for school debt.
  • A local Essential Services Assessment could be levied by local governments on those industrial taxpayers who get PPT relief (excluding those exempt under the $40,000 threshold.) This assessment would be levied against the taxpayer's real property but will never exceed the amount of tax they otherwise would have paid with the PPT still in place.

An overview of the legislation and links to the bill language is available here. Please note that all bill language is final regardless of any differences in font color.
 
In order for this legislation to take effect, two things need to happen: 

  1. Governor Snyder needs to sign each bill into law, which we expect he will do.
  2. Michigan voters will need to approve a ballot measure in August 2014 in order to allow revenues to be directed towards local governments. This would NOT be a constitutional amendment, but merely an agreement that locals should get this revenue stream. The Michigan Chamber supports this vote.

Requiring a statewide vote to implement the plan would not have been the Michigan Chamber's preferred approach; however, we recognize that there is no easy solution for this very complicated and vexing tax problem and it was important to enact this first step.
 
We will continue to make eventual expansion of this tax relief to all business taxpayers a legislative priority as Michigan's economy and revenues improve!
 
Please contact Tricia Kinley for further questions about this legislation or next steps at tkinley@michamber.com or (517) 371-2100.