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Tag: Ownership

Just For Being Here

By JGillman, Section News
Posted on Mon Jan 13, 2014 at 10:15:29 AM EST
Tags: Policy, Taxes, PPT, TPP, Business Equipment Tax, Luxury Tax, Private Property, Ownership, Budget Surplus, Michigan (all tags)

Business is punished for operating in Michigan.

Its actually been punished in 39 states as of 2012 by way of personal property tax on business. Equipment, shelving, tools, furniture, etc..; bought, then taxed at 6%, then repeatedly taxed as 'wealth' like non-homesteaded property. In this way, business owners are told (as they are with smoking laws, work rules, and being converted to tax collectors) they really don't own JACK. None of it is under any absolute control, and frankly if the Business owner doesn't make a buck? They are still told to "Cough it up sunshine, you owe what you owe."

Just for being here.

And its not just the cost of having stuff laying around that punishes the Michigan entrepreneur. As is the case with many government rules, its the cost of compliance. The Tax Foundation writes:

"TPP taxation is "taxpayer active," meaning that individuals and businesses must fill out tax forms listing all of their taxable personal property, adding a compliance cost to the total cost of administering personal property tax. This is in contrast to real property taxation, which is "taxpayer passive": a statement valuing the land, improvements, and property tax owed is sent to property owners, alleviating compliance costs while adding some cost for government to administer the tax."

In a nutshell; "here are your manacles, make sure you clasp them securely around both ankles.."

But relief could be in sight soon. The state of Michigan will have a surplus.

"The Senate Fiscal Agency projected $1.3 billion in increased revenue over a May 2013 estimating conference. House Fiscal pegged the number at $1.1 billion, while Treasury offered a more conservative $708 million, citing uncertainty over unclaimed Michigan Business Tax credits."

The conservative estimate might be light, but the $1.3 billion surplus estimate easily reaches the $1.2 billion in PPT revenues each year.

Given the compliance costs can be transformed into profitable effort of growing business, and the added incentive for business attraction, (particularly to manufacturing and its associated equipment expenses) job growth could well explode going forward.

Its time for legislators to step up, and do a wholesale elimination of what has been considered (2nd only to the repealed MBT) "the second dumbest tax in Michigan."

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