Michigan Senate Introduces Legislation to Begin Phase-Out of Personal Property Tax

April 19, 2012

The Michigan Senate on Tuesday, April 17th, unveiled an Administration-backed proposal to immediately exempt small businesses from Michigan's burdensome business personal property tax and begin phase-out of the tax on manufacturing equipment.  

This $1.2 billion tax on Michigan job providers continues to make Michigan uncompetitive for jobs - particularly among Great Lakes states - most of whom exempt this complicated and burdensome tax.

Highlights of the proposal 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 budget. 

The Michigan Chamber has been a strong advocate for substantially reducing, and eventually eliminating, the personal property tax. We believe that the tax should ultimately be eliminated for all taxpayers, but we are encouraged by this significant first step. This is the first time in the last decade that a credible plan has been proposed. 

Read an overview of the plan here. View the 8-bill package for personal property tax reform here.