Michigan Senate expected to pass bills to eliminate personal property tax on manufacturers

LANSING (Detroit Free Press) – The Michigan Senate is expected to pass bills today to begin the phased elimination of personal property tax on Michigan manufacturers.


Senators plan to vote on an eight-bill package this morning, said Amber McCann, a spokeswoman for Senate Majority Leader Randy Richardville.


The legislation, which would still require approval by the state House, is expected to proceed despite continuing opposition from the Michigan Municipal League, whose members are concerned about how the local revenues produced by the tax will be replaced. Local school districts, which also receive revenues from the tax, also oppose the plan.


In a speech Wednesday to the Michigan Association of Certified Public Accountants, Lt. Gov. Brian Calley called the tax on equipment a disincentive to investment and repeated promises to replace the bulk of the local revenues using “windfall” revenues the state will have in hand once industrial tax credits extended under the previous administration expire around 2016.


Revenues generated by all forms of the personal property tax total between $1.2 billion and $1.3 billion, Calley said. The industrial portion accounts for about $450 million.


Setting a base threshold for imposition of the tax at $40,000 in taxable value – roughly equival to $80,000 in market value – would decrease the revenue generated by about 7% but eliminate more than 60% of the parcels now subject to the tax, Calley said.


“That gives you an indication of how inefficient the tax system is,” he said. “That doesn’t even include the cost of compliance.”


The exemption for small parcels would begin in 2013.


Under the bills, exempting new industrial equipment from the tax would begin in 2016 and the taxes already in place would be phased out between 2016 and 2022.


Senate Minority Leader Gretchen Whitmer, D-East Lansing, will introduce an amendment today to link the personal property tax repeal bills to passage of another GOP-sponsored bill that would require drug testing for corporate welfare recipients, Whitmer spokesman Bob McCann said.


He said the bills are “a tax handout to big businesses” and tying them to the requirement for drug testing would at least provide “a shred of accountability” that the money won’t be improperly spent.


The drug testing bill was introduced by Rep. Tom McMillin, R-Rochester Hills.