January 27, 2005
January 27, 2005
Granholm Unveils Proposal to Restructure Business Taxes SBT Transformation Aimed at Job Providers of 21st Century
LANSING – Governor Jennifer M. Granholm today introduced her administration’s plan to make business taxes in Michigan more attractive for job providers. The Michigan Jobs & Investment Act will broadly restructure business taxes in Michigan, cutting the existing Single Business Tax rate by 37 percent for those businesses that pay it.
Under the plan, three out of every four businesses that pay the SBT will see a reduction in their tax rate. Granholm’s proposed changes will help ensure that existing major employers continue to keep jobs in Michigan, will help small businesses grow, and will encourage research and development companies to create new high-growth jobs in this state.
“Job growth, coupled with a great quality of life, will make Michigan a magnet for jobs, investment, growth, people and opportunity,” said Granholm. “This proposal helps Michigan retain jobs, attract the jobs of the future, and protect schools and health care for our citizens. The changes we’re introducing today make Michigan’s business tax structure simpler, fairer, and more attractive for the job providers we want to stay and grow in Michigan.”
The Michigan Jobs & Investment Act:
- cuts the Single Business Tax rate 37 percent;
- gives small businesses a 40 percent rate cut;
- creates a 35 percent refundable personal property tax credit for manufacturing and research and development property;
- establishes a tax credit that will encourage research and development companies to grow.
“Small businesses create jobs from Main Street to Automation Alley,” Granholm said. “This proposal slashes state business taxes for our entrepreneurs and store owners, providing a savings that they can invest in their businesses to grow more jobs here.”
Granholm said because the proposal is revenue neutral, it will not reduce revenue that, in turn, would produce harmful budget cuts to Michigan’s schools, health care programs, and local units of government.
“Our employers and our families want the same things – good schools, affordable health care, public safety, and a strong business climate,” Granholm said. “In the New Economy, a competitive business climate and a great place to live and raise a family go hand-in-glove.”
The proposal will increase the profit component of the tax base for corporations and bring taxes on insurance companies in line with the national average. By eliminating tax breaks and credits, placing a greater emphasis on profits, and reforming insurance taxes, the revised SBT would generate enough revenue to cut the overall tax rate.
A two percent tax on insurance premiums would be applied to insurance companies, bringing taxation on Michigan’s insurance industry in line with the national average. However, the plan would not apply to Blue Cross Blue Shield of Michigan, health maintenance organizations, or self-insurance plans. Also, out-of-state businesses will likely see a tax increase under the plan.
“This is the most significant restructuring of business taxes since the SBT was created more than 30 years ago,” said Granholm. “This proposal will create jobs, simplify our tax system in a fiscally responsible way, and provide broad-based tax relief to most of our job providers.”
If approved by the Legislature, the plan would go into effect for tax years starting on or after January 1, 2006.
