If it walks talks like a duck More epithets for the MBT

December 9, 2008
Print
Text Size:
A A

Folks continue to heap scorn on the Michigan Business Tax. Twenty-nine amendments to it have already passed the Legislature, but there are scores more waiting in the wings, according to Ronald J. Kaley, an accountant and senior manager with Echelbarger, Himebaugh, Tamm & Co.

Kaley spoke at the recent Fourth Friday Technology Forum put on by The Right Place Inc. The subject: Where do we stand on the MBT?

The MBT, labeled by one wag as Son of SBT, is not quite a year old, and in that short timeframe may have generated as much angst and agitation as the SBC ever did in its 30 years of existence.

"The most complicated piece of state tax legislation in this country and maybe in the world," is how Kaley nets out the MBT, which he said is fraught with unintended consequences that resulted from a mix of "special interest groups, lobbyists, a weak economy and a naïve term-limited legislature."

When it was rolled out, the MBT was intended to cut a break for large manufacturers in Michigan, which it did. But taxes for other types of business went up — reportedly as high as 600 percent, in some cases, for businesses in service industries. The MBT is also "loaded with controversy," said Kaley, due to the many tax credits successfully driven by lobbyists, including some that are obviously written for the benefit of a single company, such as Meijer Inc., Spartan Stores and Michigan International Speedway near Jackson.

The details of the MBT law are excruciating. Compliance efforts by companies that have made estimated payments on it so far have revealed "mass confusion," said Kaley.

And, of course, there is the 22 percent surcharge tacked on by the Legislature at the last second to cover an emergency shortfall in state funding. How long that will remain is anyone's guess, but Jared Rodriguez hopes it isn't long.

Rodriguez, vice president of Government Affairs at the Grand Rapids Area Chamber of Commerce, said the MBT needs an overhaul by the lame duck Legislature.

"The legislature missed an opportunity to establish a prudent and fair business tax with the MBT and short of eliminating it completely, steps must be taken to at least upgrade it from horrible to terrible," said Rodriguez in a statement released by the Chamber Dec. 1.

Painting green

American Seating is among the first contract furniture manufacturers to eliminate the use of an iron phosphate conversion coating system and move to a zirconium conversion coating system.

What does this mean? American Seating is changing the pre-treatment methods of products before they are painted. The coating systems are used on steel products as a primer for painting.

The iron phosphate system eventually ends up in waterways, causing algae blooms that disrupt the ecosystem. According to the city of Grand Rapids’ Wastewater Treatment Plant, if more manufacturers switch systems, it would cost the city less in testing. Which means lower taxes, right? Right?

A fond farewell

Even though city commissioners appointed Grand Rapids City Manager Kurt Kimball to another two-year term on the Grand Valley Metro Council, the venerable Kimball attended his last council board meeting last week. And a going-away cake wasn’t the only item being served up, as plenty of plaudits for the city’s retiring manager also were dished out. Here are a few:

“There was not always joy in working with the city of Grand Rapids. That’s the truth. But you always found a way for us to find common ground. You’ve done an outstanding job,” said Kentwood Mayor Richard Root.

“I’ve always considered him to be the best in the business — not just in the state, but in the country. He is a decent, decent human being and he has a genuine and passionate love for this community,” said Daryl Delabbio, Kent County administrator and controller.

“Managers are a different breed and their jobs are tough. My hat’s off to Kurt for the job he has done,” said Plainfield Township Supervisor George Meek.

“I think he has been a role model for professionals throughout the state. Kurt is still relatively young and there is still time for him to get involved in county government,” said Ottawa County Administrator Al Vanderberg.

Wyoming Mayor Carol Sheets noted that Kimball was attacked by the press numerous times during his 22-year tenure as city manager, but never once did he retaliate.

“Integrity is a big issue to me. We appreciate the integrity you have presented us,” said Gaines Township Supervisor Don Hilton.

“We have appreciated everything you have done for this organization,” said Don Stypula, Metro Council executive director.

 “This is my last meeting, and I count all of you as friends,” said Kimball. “Serving on this council has been one of the highlights of my career.”

Excellence goes unrewarded

The extreme slowdown in the home construction industry in Michigan has knocked out the 2009 Awards of Excellence, which has always been a big part of the annual events of the Home & Building Association of Greater Grand Rapids.

"We are not discontinuing it; we are suspending it for the next year," said Judy Barnes, executive VP and CEO of the association.

The awards program "is a very time-consuming project," she noted. The association has suffered a reduction in staff due to the depressed state of the home construction industry in Michigan, "and also, we're expecting fewer homes in the Parade of Homes this year," added Barnes.

"The plan is to have (the awards) back in place in 2010 because we expect 2010 to be a pretty good improvement in the housing market," added Barnes.

A call to the Michigan Association of Home Builders in Lansing revealed that the number of new home building permits in Michigan has dropped 76 percent from 2005, according to Lee Schwartz, executive vice president for government relations at the MAHB.

"In some areas, the building permits are non-existent," he said. Areas in southeast Michigan that used to issue 300 or 400 permits a year "haven't even issued 30" in 2008, he said.

In 2007, 15,000 permits were issued in Michigan: "This year we're going to come in at about 12,000. Next year, depending on what happens, we're expecting to drop below the 10,000 level," said Schwartz.

More troubling statistics from the MAHB: In 2005, the overall estimated impact of residential construction in Michigan on incomes was $9.9 billion. It yielded $3.3 billion in state and local taxes and provided 153,541 jobs. In 2007, its contribution to incomes had dropped to $2.3 billion, and provided $786 million in taxes and 30,902 jobs.

The bright side: West Michigan is doing better than the east side of the state in terms of home construction because its economy is more diversified.

Barnes said there were 133 new homes in the spring Parade of Homes in 2007. This year the number was 83, and in 2009, she said they are hoping to get close to 50.

The Grand Rapids area Parade of Homes has been among the top five largest "scattered site" Parade of Homes in the U.S. every year, according to Barnes, putting us up there with Minneapolis/St. Paul and Kansas City.

Barnes said the glut of foreclosed homes is part of the problem, along with the credit crunch in general. Still, she is keeping her eyes focused on a better future.

"We are definitely challenged … (but) builders are still building and homes are still selling," she said.

Don’t worry; be happy

The 2008 Stress in America survey by the American Psychological Association found that stress levels have increased notably over the last two years, particularly in the last six months. Money and the economy were identified as the top concerns.

Among 2,500 participants nationwide, 81 percent said money was a significant cause of stress, up from 70 percent in 2007 and 59 percent  in 2006. Concerns about other economic issues also increased: Between April and October, worries about work jumped from 62 to 67 percent; concerns over housing costs rose from 56 to 62 percent; and job stability woes increased from 48 to 56 percent.

Editor's Picks

Comments powered by Disqus