Eliminating the Personal Property Tax and Making Michigan More Competitive

By Mike Brownfield | April 02, 2014

Governor Snyder, Lieutenant Governor Brian Calley and a bipartisan coalition of state legislators came together this year to reform Michigan's tax code. Their goal: to keep making Michigan more competitive for job creators while ensuring that local governments have a reliable source of revenue.

One of the chief culprits in Michigan's uncompetitive tax system is the Personal Property Tax (PPT) on small businesses and manufacturers -- an obsolete, burdensome tax that is assessed each year on the machinery and equipment that a business owns. As a consequence of the tax, businesses are penalized for investing in the very equipment they need to function, making it more costly for them to grow and create jobs.

The PPT was also a source of revenue for local governments, albeit an unreliable one. For example, if a business were to leave town, the local government would lose the tax revenue it once relied upon.

In 2012, Governor Snyder signed legislation to eliminate the PPT, and last week the governor signed legislation making it possible to ensure more stable local government revenue for essential services, including police and fire protection. The changes will require voter approval in August.

Governor Snyder said in a press conference last week that the efforts to reinvent Michigan's government and reform the state's tax system are paying off.

"We've shown great success about bringing more and better jobs to the State of Michigan. I'm proud to say we've created over a quarter million private sector jobs in the last three years in our state.

"It's showing up in our personal income. We were just ranked number nine in the country for per capita personal income growth in the State of Michigan for last year.

"So it is working, but this is another major step forward to say, 'Let's not stop. Let's continue to make us more competitive, better and better at what we're doing, and part of that is working on the process of getting rid of this dumb tax.'"