More Work Needs to Be Done on Senate-Approved Legislation to Phase-Out Job-Killing Personal Property Tax

May 17, 2012

The Michigan Senate in early May passed legislation to begin addressing Michigan’s burdensome personal property tax. The Michigan Chamber is pleased that the process continues to move forward, however the Senate added problematic amendments that must be removed in the Michigan House.

Eleventh-hour amendments put forward by local government groups, would force the personal property tax back on job providers if the Legislature failed to fully reimburse local governments based on formulas provided in the legislation. The Michigan Chamber is opposed to this local government demand because it causes significant uncertainty to businesses attempting to plan for future investment decisions. Requiring companies to maintain this “unpredictable” tax liability on balance sheets would send a horrible signal about making capital investment in Michigan.

Highlights of the proposal as passed by the Senate include:

  • Effective 12/31/12: Exempt small businesses with personal property under $40,000 (per jurisdiction) in taxable value. 
  • Effective 12/31/15 manufacturing property which is 10 years or older is 100% exempt. 
  • Manufacturing property purchased and placed in service in Michigan after 12/31/11 would become 100% exempt on 12/31/15.  
  • The proposal would be paid for (reimburse local governments) using expiring business tax credits. 
  • Codify in statute the reimbursement “funds” for local governments, provide reimbursement of 100% of personal property tax revenue associated with debt, and full reimbursement for personal property tax loss to the extent it exceeds 2% of a local government’s general fund. 
  • Reinstate the personal property tax if future legislatures fail to fulfill reimbursement promises to local governments.

The Michigan will be actively working to strip out the so-called “poison pill” added by the Senate.
For questions about the proposal please contact Tricia Kinley at (517) 371-2100 or tkinley@michamber.com.