1 / 16

Michigan Business Tax Policy

Michigan Business Tax Policy. ASPA/MICAP Conference September 30, 2011. History of Michigan Business Taxes. Business Activities Tax- 1953-1967 Corporate Income Tax- 1967-1975 Single Business Tax- 1976-2007 Michigan Business Tax- 2008-2010 Corporate Income Tax- 2012-?. Advantages of SBT.

nieve
Download Presentation

Michigan Business Tax Policy

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Michigan Business Tax Policy ASPA/MICAP Conference September 30, 2011 R. Kleine 9/2011

  2. History of Michigan Business Taxes • Business Activities Tax- 1953-1967 • Corporate Income Tax- 1967-1975 • Single Business Tax- 1976-2007 • Michigan Business Tax- 2008-2010 • Corporate Income Tax- 2012-? R. Kleine 9/2011

  3. Advantages of SBT • Stable- largest decline was 14% (1981) • Treats labor and capital equally • Does not discriminate based on type of organization • Provides good measure of benefits received by business from public services • Low rate minimizes interference with business decisions R. Kleine 9/2011

  4. Disadvantages of SBT • Complicated • Unique in U.S. • Tax on compensation not understood • Subtractive method of calculation would have likely reduced criticism R. Kleine 9/2011

  5. SBT as % Private GDP R. Kleine 9/2011

  6. Advantages of MBT • Favorable treatment for small business (gross receipts $20 million or less)-1.8% of business income • Stable (profits 30%, gross receipts 70%) R. Kleine 9/2011

  7. Disadvantages of MBT • Complicated- too many credits • Higher rates than SBT- 6% on business income compared with 1.9% for SBT • Surcharge very unpopular R. Kleine 9/2011

  8. Advantages of Corporate Income Tax • Widely used • Business only pays when profitable R. Kleine 9/2011

  9. Disadvantages of Corporate Income Tax • Unstable- down 34% in 73-75 period • Favors labor over capital • Discriminates based on form of organization • Penalizes efficiency • Subject to manipulation- voluntary tax • Rate more easily increased than SBT or MBT • 95,000 fewer businesses pay than under SBT and MBT-41,000 now pay R. Kleine 9/2011

  10. Business Tax Options R. Kleine 9/2011

  11. Business Tax Cuts Will Not Create Many New Jobs • Business tax cuts offset by tax increases on individuals and families and spending cuts • Most of tax relief goes to non-mobile retail and service businesses- only 18% to manufacturers • Business taxes much lower than in 1990s • Business taxes are only 5% of state GDP and tax cut amounts to only 0.5% of GDP R. Kleine 9/2011

  12. Business Tax Cuts by Sector • Services- $575 million • Prof.& Tech services- $181 million • Manufacturing- $279 million • Retail Trade- $153 million • Wholesale trade- $139 million • Real Estate- $110 Million • Construction- $90 million • Finance & Ins.- $75 million • Other- $112 million R. Kleine 9/2011

  13. Michigan Business Taxes as % Total State Taxes R. Kleine 9/2011

  14. Corporate Profits Up Sharply in Last Three Years 2011 Q2: $1,934 Source: Bureau of Economic Analysis

  15. Michigan Proprietors Income(Millions)

  16. Contact Robert J. Kleine Great Lakes Economic Consulting www.greatlakeseconomics.com 9/2011 R. Kleine 9/2011

More Related