Tag: PPT

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."

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."

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.

As many business owners understand, there is "property tax" and there is "property tax".  And while the two seem to be quite similar, the difference is how one is handled over the other.

Property tax as we all recognize is the repeated taxation on real property (acreage, land, buildings) which is used in a number of different formulas and provides a basis for government funding, millages for special purposes, and has for so many years until recently been a boon for local governments who would rather grow more services, than cut taxes on the increased value added properties.  It is regressive, in that it discourages ownership, and puts at risk those on fixed incomes.  Property tax on real property as it stands is already bad enough, yet has funded state and local government expansion to a point that any contraction in values puts at risk those things necessary and proper.

But "Property Tax", as in PERSONAL Property tax or INDUSTRIAL property tax, is something even more sinister. In 2007, I wrote:

"For some of us, the process is mostly painless financially; A couple of desks, computers, a few inventory racks.. But for quite a few Job creators, it can make a profitable year much less so with equipment that costs hundreds of thousands for manufacturing processes etc..

Again, Michigan needs to re-visit the idea of eliminating these regressive policies which hamstring our ability to be more productive and provide for our OWN families, much less those who feed off of the generosity of Michigan taxpayers through the force of Michigan government. (more to follow on this)"

All equipment bought for use in your business is taxable at the time of purchase.  Then it is taxable when you use it, repeatedly, like real property tax.  It is assessed a little differently, and relies for the most part on voluntary inventory declaration of business assets. (though larger businesses might have a personal visit from an assessor around Dec 31) It creates a level of work for the business owner that can be complicated depending on the quantity of business useable assets.  It also creates a great deal of work for township assessors who must peruse the minutia (if they are doing the job properly) and properly report to the state the value of those assets and amounts collected.

Often it becomes a whole lot of work for very little benefit, if anything at all.