December 11, 2012 Category: Business Formation & Planning
Many people in the business community are concerned that overbearing taxation may impede economic growth. This could be especially important in an economy still slow to recover from the recent recession. The governor of Michigan has responded to this concern by releasing a new plan to gradually eliminate a tax manufacturers are charged for equipment. The new plan is an altered version of another recent proposal to eliminate the tax. It is important for manufacturers in the state to consider the potential changes in taxation when creating their business planning options.
The original proposal was a Republican-sponsored bill that passed in the state Senate in May. The majority of the state legislators in the Senate are Republican. The bill now awaits a vote in the Republican-controlled House. The governor’s new proposal is an attempt to appease those who are worried about the effects of eliminating the tax since it contributes significantly to funding local schools and emergency services.
The new proposal reportedly contains provisions to partially replace the revenue with a portion of Michigan’s taxes levied on out-of-state retail transactions. The plan also would allow local governments to charge a tax in order to recover some of the lost funds for police, ambulance and fire services. Michigan may hold a statewide public vote in 2013 on the bill to eliminate the tax, which many see as promoting a noncompetitive business environment compared to neighboring states.
Many manufacturers will be watching the bill in order to make the necessary adjustments to their business planning decisions to capitalize on the more advantageous taxation policy in Michigan. Business owners operating in manufacturing in the state may also want to consult legal and financial professionals in order to ensure the best planning options. Also, if the bill becomes law, this could provide more incentive for entrepreneurs to consider opening their business ventures in the state.
Source: MLive.com, ” Michigan business tax debate: Snyder’s revised plan a big part of lame-duck agenda ,” David Eggert, Nov. 27, 2012