One might think business lobbyists would be collectively singing Pharrell Williams’ “Happy” after voters overwhelmingly approved phasing out the business personal property tax last month.
They are pleased, of course. But they are not satisfied.
“We view this as a huge accomplishment for Michigan,” said Tricia Kinley, senior director of tax and regulatory reform at the Michigan Chamber of Commerce. “It is certainly not the final story.”
Despite a widespread perception that the personal property tax is “dead,” as Gov. Rick Snyder said following voter approval of Proposal 1, the tax that businesses hate still has a pulse.
Large nonmanufacturing companies, including major retailers such as Meijer Inc., big legal and accounting firms and utilities, were not covered by Proposal 1 and will continue paying the tax on their office equipment.
That will generate roughly $400 million a year for local governments, according to an estimate from the state House Fiscal Agency.
But the businesses that pay the tax will eventually want relief.
Proposal 1 “opens the door to further reform,” said Tom Scott, a spokesman for the Michigan Retailers Association.
The new law gives relief only to businesses that have personal property with a taxable value of $40,000 or less and larger businesses, mostly manufacturers, that use equipment for industrial processing.
Eligible small businesses are exempt from the personal property tax starting this year, but must apply for the exemption annually with their local assessors.
The exemption for larger businesses will be phased in starting in 2016. Those companies also will pay an “essential services assessment” generating about $100 million a year to support local government services.
Kinley said there will likely be an eventual push for tax relief by businesses that didn’t get a break under Proposal 1.
“A lot of those folks would like personal property tax relief down the road,” she said.
Scott said the legislation that led to Proposal 1 was a hard-fought compromise that provides tax relief to most retailers and reimburses local units of government for lost personal property tax revenues.
For whatever reason, large retailers didn’t push hard to be included in Proposal 1, he said.
But they and other businesses still required to pay the personal property tax will eventually plead their case in Lansing, Kinley said.
She said she doesn’t see that happening, though, until at least after 2016 when the exemption for manufacturers starts and businesses get a sense of how well Proposal 1 is working.
“We need to let the dust settle and let the law run,” she said. “Most of us don’t want to go through that debate again for awhile.”
But you can bet that debate will happen, especially if business-friendly Republicans continue to dominate state government.
When it comes being taxed, businesses are never truly “Happy.”
Email Rick Haglund at haglund.rick@gmail.com
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The post Rick Haglund: Proposal 1 opens door to further business tax reform – MLive.com appeared first on Evan Vitale Consulting Blog.
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