President Obama’s fiscal year 2015 budget proposes to increase taxes on individuals by over $820 billion and on businesses by about $500 billion, for a total of over $1.3 trillion in new taxes over the next ten years....
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- Michigan Approves Phaseout of Destructive Personal Property Taxes
Michigan Approves Phaseout of Destructive Personal Property Taxes
Today might not be the End of the World, but I have long said that one sign of the Apocalypse would be if Michigan repealed its destructive business taxes. Back in March, Michigan did just that: repealing the uniquely awful Michigan Business Tax (MBT), which involved a 4.95 percent profits tax, an 0.8 percent receipts tax, and a 21.99 percent surcharge on liability, coupled with lavish tax incentives for select industries ($400 million worth per year, including cash refunds for filmmaker expenses). Led by Gov. Rick Snyder (R), the state voted to overturn that entire system and replace it with a standard 6 percent corporate income tax with no targeted incentives.
Michigan has now tackled what Snyder called “the second dumbest tax in the United States” (after the MBT) by signing a series of bills to repeal the state’s personal property tax. Personal property taxes, increasingly on the decline, are a property tax on equipment, furniture, and other possessions. Americans once paid this tax on their home possessions, but today it’s primarily a tax on business equipment. Under Snyder’s plan, which he signed into law yesterday:
- Beginning January 1, 2014, all new business personal property valued at $40,000 or less will be exempt from the tax.
- Beginning January 1, 2016, all new business personal property, as well as all personal property purchased between 2013 and 2015, will be exempt from the tax.
- Beginning January 1, 2016, all business personal property at least 10 years old will be exempt from the tax. This will continually roll old personal property off the tax rolls until all business property is exempt in 2024.
Savings from the repeal and expiration of MBT credits will be used to reimburse local government revenue losses.
Michigan has started to see the beginnings of a recovery. The state’s unemployment rate dropped to 8.9 percent in November, down from the record high level of 15 percent. It’s still higher than the national average, but this is a state that coined the phrase “one-state recession,” having never exited from the 2001 recession.
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