Voters will decide in August if businesses should get out of paying taxes on equipment each year.
Michigan’s personal property tax applies to all kinds of things: Carmakers pay the tax on heavy machinery, restaurants pay it on ovens and dishwashers. It doesn't matter if the equipment is new or old. The tax amounts to several hundred million dollars each year.
The effort to repeal the personal property tax was bi-partisan. A previous version replaced only a portion of the lost revenue to local governments.
Walker Public Safety Director Catherine Garcia-Lindstrom says that could’ve meant cuts to police and fire services in some communities.
“When people start talking about making cuts on something that is a revenue stream for local government, it makes all of us a little bit nervous, in fact more than just a little bit nervous,” Garcia-Lindstrom said.
The latest version of the repeal replaces all of the lost revenue to local governments. It would divert the money from the use tax. Any shortfall from that fund would be taken from the state’s general fund.
“State’s like Illinois, New York, Pennsylvania – they don’t have a personal property tax in their state,” State Rep. Dave Hildenbrand, R-Lowell, said. “As we compete in this very competitive climate, this environment for jobs and job growth, we are looking for every opportunity to have an edge.”
The repeal was signed into law at Van's Pattern Corporation in Grand Rapids. The company makes Styrofoam shapes used to create stamping dies mostly for the automotive industry. Owner Dan Vander Molen says he’s not going to run out and hire a bunch of people or buy new equipment.
“But it’s just another little piece of the puzzle to make us more competitive. I’ve got machinery out here that I’ve had for 20 years that I’m still paying taxes on,” he said.
But the repeal will only happen if voters agree with the arrangement. That election is set for August 2014.