Banking & Finance, Government, and Law

Voters approve business tax cut

August 6, 2014
| By AP |
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Michigan voters decided Tuesday to end a tax on manufacturing and small business equipment in a referendum that was pushed by Gov. Rick Snyder, who said scrapping the levy would encourage investment.

Proposal 1, the only statewide question on the primary ballot, will reimburse local governments for their lost personal property tax revenue by sharing a portion of the state's use tax.

The personal property tax is paid by businesses and particularly manufacturers and is based on the value of their machinery, office furniture and other equipment. Some Michigan communities rely on the tax revenues to pay for basic services.

State lawmakers already repealed the tax on small businesses and manufacturers, but the issue required voter approval, which it now has.

"You buy a personal vehicle and they don't charge you an extra 6 percent for it every year. But they do if you're a business," said Jonathan Pack, 30, of Traverse City, who voted to end the tax. "We get taxed quite a bit, and this one doesn't make sense to me."

Michigan's business community never has been a fan of the personal property tax, which applied to machines, office furniture and other equipment.

Business owners said it discouraged investment and was a compliance headache.

Snyder called the tax "dumb" and said it was a disincentive for businesses to come to the state.

Under a deal that lawmakers, municipalities and businesses reached with Snyder's administration, local governments would see the lost money fully replaced by a portion of Michigan's 6 percent tax on out-of-state purchases, lodging assessments and telecommunications, as well as a new special assessment on industrial equipment estimated to be about 20 percent of businesses' current personal property tax bill.

Supporters call it a win-win.

The measure had no organized opposition.

If voters had not approved the proposal, the laws enacted by Snyder and the Legislature would have been halted.

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