May 11, 2005

LANSING – Governor Jennifer M. Granholm today called passage of her Michigan Jobs and Investment Act a critical step in reshaping Michigan’s economy.  Testifying before a panel of Democratic legislators in Muskegon, the governor highlighted the need to reform the state’s business tax structure as one way to create a climate in Michigan that encourages job creation. 
 
“The current tax structure penalizes job creation and discourages the investment we need to create new jobs tomorrow,” Granholm said in her testimony.  “We need to do everything we can in Michigan to create a business climate that attracts jobs – that means training people for work, giving every child an opportunity to go to college, ensuring great schools, and creating a business tax structure that attracts jobs rather than driving them away.” 
 
Granholm said the state’s business tax structure has not been updated in 30 years and should reflect current business realities.  Currently, a business’ tax liability is determined more by labor and materials than profits, which results in an uneven distribution among sectors of the economy.  The governor’s proposal addresses these existing inequities while cutting taxes for 77 percent of businesses in Michigan and creating new incentives for the research and development critical to the state’s economic growth. 
 
Key provisions of the Michigan Jobs and Investment Act include:

•  cuts the rate for all SBT taxpayers – reduced from 1.9 percent to 1.2 percent;

•  cuts the rate for all small businesses – reduced from 2 percent to 1.2 percent;

•  creates a manufacturing personal property tax credit – manufacturers would get a credit for 35 percent of personal property taxes paid on property used for manufacturing or R&D purpose;

•  creates an R&D credit – taxpayers would receive a credit for 1.2 percent of compensation paid to employees engaged in research and development.

Granholm’s proposal has won wide support of business, labor, and civic organizations across Michigan.  At today’s hearing, Sappi Fine Paper Mill, Muskegon’s largest employer, expressed their support for the plan, saying it would make them more competitive.  In addition, the plan has been endorsed by the Michigan Manufacturers Association, major Michigan employers like Steelecase, Pfizer, US Steel, and the Big 3 automakers, the UAW, Michigan AFL-CIO, the Michigan Municipal League, and the Small Business Association of Michigan (SBAM). 
 
The Michigan Jobs and Investment Act is one piece of the governor’s five-part economic plan to reshape the state’s economy.  The plan, which was unveiled during her State of the State Address in February, includes proposals to accelerate state spending to create jobs today, provide job retraining to match unemployed workers with existing job openings, new opportunity for every child to receive higher education, and investment in the high-tech competitive edge technologies that will help create the jobs of tomorrow.
 
“The Michigan Jobs and Investment Act is a key piece of my plan to reshape Michigan’s economy," said Granholm.  “We must reform a system that punishes job providers and discourages investment to make it simpler and more fair.”
For more on the Michigan Jobs and Investment Act, log onto www.michigan.gov or www.michiganlegislature.org.

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