personal property tax

People voting
Steve Carmody / Michigan Radio

When you step into the voting booth tomorrow, one of the things you’ll be looking at is Proposal 1.

The proposal asks voters to approve a tax policy change, but the language is very confusing.

Michigan Radio staff have been examining the proposal. Here's a brief summary of their reporting and analysis pieces, to answer questions you might still have before heading to the polls tomorrow.

Mark Brush explained Proposal 1 and tackled these questions:

  • What is the proposal all about?
  • What’s problematic with the language of the proposal?
  • What do “yes” and “no” votes mean?
  • What is "personal property tax"?
  • How will it affect local business and communities?
  • Who’s in favor of a “yes”/"no" vote on the proposal?
  • What will happen if the proposal wins/fails?

Jake Neher / MPRN

Until recently, businesses in Michigan had to pay taxes on almost all their equipment. Not surprisingly, they didn’t like this tax.

The state Legislature has done its part to phase out the personal property tax, but the rest is up to voters when they decide the fate of Proposal 1 on Tuesday’s ballot.

Businesses pay the personal property tax on everything from the factory machines that build cars and trucks to playground equipment and changing tables.

Meet Jerry Grubb, who owns the Wee Discover daycare center in Waterford.

“Sixteen years we’ve had those tables and changing tables, and 16 years I’ve been paying personal property tax,” he says. He says the same is true for computers, desks, and the high-powered dishwasher that keeps spoons, plates and baby bottles clean.

“I pay tax when I buy it and I pay tax on it every year,” he says.

Grubb and other Michigan business owners say the personal property tax is not only unfair, and cumbersome to comply with, but it also discourages investment: buying new equipment and hiring more employees.

Well, irritated business owners got their wish this year when the Legislature adopted a plan to phase out the personal property tax.

The Michigan primary election is on Aug. 5, and one of the things you’ll be looking at is Proposal 1. It asks voters to approve a tax policy change, but the proposal is very confusing.

To help us clear this up a little, Bob Schneider joined us today. Schneider is with the Citizens Research Council of Michigan. The organization is a nonpartisan non-profit group that objectively analyzes policy issues like Proposal 1.

*Listen to the full interview above.

Michigan Citizens for Strong and Safe Communities / YouTube

First, let's get a little griping out of the way.

Just look what your Michigan Legislature is asking you to decipher when you step into the voting booth on August 5:

There are many problems with this language.

Steve Carmody / Michigan Radio

Michigan voters will have a chance to drive the final nail into the coffin of the state’s  Personal Property tax this summer. The Board of State Canvassers today designated the PPT question as Proposal 1 on the August 5 ballot. It will be the only statewide question on the ballot.  

Businesses pay the tax based on the value of their equipment and other assets. Many Michigan communities rely on the tax revenues to pay for basic city services.

automotiveauto.info

The upcoming August primary ballot will feature something not usually seen on August primary ballots: a statewide ballot proposal, something we haven't seen in August since 2002.

This ballot proposal will ask you to decide the fate of a reform of Michigan's industrial personal property tax, but there is a pretty significant hurdle that backers have to face: that icky little three-letter word – tax.

Chris Gautz, reporter for Crain's Detroit Business, joined us to talk about all this.

*Listen to our interview above.

Lindsey Smith / Michigan Radio

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.

Steve Carmody / Michigan Radio

LANSING, Mich. (AP) - Michigan Governor Rick Snyder has signed legislation designed to ensure local government budgets aren't hurt if manufacturers and small businesses get planned tax cuts.

A phase-out of taxes on industrial machinery starts in 2016 and is underway for small businesses with equipment. The tax cuts will be halted if a statewide vote fails in August.

Lester Graham / Michigan Radio

When Governor Snyder pushed through a repeal of the the personal property tax — aka the PPT — in late 2012, it was seen as a good step towards encouraging businesses to set up and expand in Michigan.

But local governments took it right on the chin. As the PPT phased out, many were in line to lose a significant source of revenue.

But there's good news for municipal officials worried about a great big hole in their budgets.

A package of bills has been introduced in the State Senate that would plug that hole, without having to revert to anything like the PPT, which Governor Snyder called "the second-dumbest tax" in Michigan.

And this package seems to have just about everyone on board, including both Democratic and Republican lawmakers.

Here to tell us more is Kathleen Gray from the Detroit Free Press, and MLive’s Jonathan Oosting.

Listen to the full interview above. 

Jake Neher / MPRN

Michigan lawmakers want to make sure local governments do not take a hit if voters decide to repeal an unpopular tax on business equipment.

State officials are urging voters to repeal the tax. They say it is outdated and kills jobs. But local governments depend on that tax to provide basic services to residents.

On Tuesday, lawmakers introduced bipartisan legislation that would fully compensate cities, towns, and counties if the tax is phased out.

A123 Systems Inc.'s battery manufacturing facility in Livonia, Michigan. The company filed for bankruptcy on Tuesday.
A123 Systems Inc. / Facebook

Michigan business owners have until the end of the day to file a form that could potentially save them lots of money on their 2014 tax bill.

Michigan’s personal property tax applies to all kinds of things. Carmakers pay the tax on heavy machinery; restaurants pay it on new ovens and dishwashers.

But in order to qualify, business owners have to file a form with their local government.

User: Brother O'Mara / flickr

Michigan population increases for the first time in seven years

Michigan gained population in 2012 for the first time in seven years, the Detroit News reports.

'This halts a decade of population losses, but population is still growing far slower than other states. U.S. Census Bureau estimates released Thursday show the state grew at just 0.1 percent, adding 6,559 residents to 9,883,360.'

Snow dumps 14 inches in northern Michigan

"A snowstorm hitting the Midwest has dumped more than 10 inches of snow in northern Michigan and knocked out power to at least 60,000 state electricity customers. The weather service says snowfall totals could reach 13 inches in northern Michigan and 14 inches in northern lower Michigan before the storm exits Michigan Friday," the Associated Press reports.

Snyder signs personal property tax and mining legislation

"Governor Rick Snyder has signed a plan to phase out the state’s tax on business and industrial equipment. Manufacturers, in particular, say the tax discourages investment in Michigan. Snyder also approved an overhaul of how mining in Michigan is taxed. The new tax on mining production will replace a hodgepodge of taxes paid by mines," Rick Pluta reports.

Steve Carmody/Michigan Radio

Flint’s Emergency Financial Manager says he’s ‘concerned’ about ending Michigan’s Personal Property tax.

Governor Snyder signed the phase out of the tax on business equipment today.

Flint relies on the tax for about 10% of its property tax revenues.

Ed Kurtz is Flint’s Emergency Financial Manager.   He hopes the legislature will help cities replace the money they’ll lose.  

Kurtz needs every dollar he can get to lift Flint from its multi-million dollar budget deficit.

A123 Systems Inc.'s battery manufacturing facility in Livonia, Michigan. The company filed for bankruptcy on Tuesday.
A123 Systems Inc. / Facebook

Governor Rick Snyder has signed a plan to phase out the state’s tax on business and industrial equipment.

Manufacturers, in particular, say the tax discourages investment in Michigan.

Charlie Pryde is a lobbyist for Ford.

“We believe the reform package the governor is signing today will make Michigan more competitive for manufacturing and Ford Motor Company more competitive in the intensely competitive automotive manufacturing marketplace,” Pryde said.

Legislation that will eliminate several hundred million dollars in taxes that businesses pay each year on equipment awaits Governor Rick Snyder’s signature. Michigan’s personal property tax applies to all kinds of things; car makers pay the tax on heavy machinery, restaurants pay it on new ovens and dishwashers.

The legislature voted early Friday morning to repeal the personal property tax and replace up to 80-percent of the lost revenue to local governments where the loss makes up more than 2.3-percent of the total tax revenue.

Joel Dinda / flickr

The state’s tax on industrial and business equipment is a step closer to being phased out. State lawmakers Thursday sent the measure to Governor Rick Snyder’s desk. 

The personal property tax repeal was one of Governor Snyder and Republican state leaders’ top priorities for the lame duck session.

They say it discourages investment in the state and kills jobs.

Supporters of the plan say it will reimburse local communities for most or all of the revenue they would lose for services like schools, police, and fire.

Ari Adler is a spokesperson for state House Speaker Jase Bolger (R-Marshall).

“Many communities rely on the revenue that comes from this tax, and we did not want to leave them in a lurch,” Adler said.

Opponents like state Rep. Vicki Barnett (D-Farmington Hills) say the bills do not do enough to make up for those losses.

“It’s clear locals are going to lose money. Schools are going to lose money. The question is, just how much? And it could be anywhere from $250 million to – what I believe, when fully implemented – closer to $800 million, if there’s no replacement,” Barnett said.

Michigan voters will be asked to approve the reimbursement plan in August of 2014. If it’s rejected, the state will stop phasing out the tax.

User: Brother O'Mara / flickr

Many bills made moves yesterday at the state capitol. Here are some of the bills that are now headed to Governor Rick Snyder's desk:

Abortion bills

Governor Rick Snyder will have the final say on a measure to add restrictions for abortion providers. State lawmakers approved the legislation yesterday. Among other things, it requires physicians to screen women to make sure they’re not being forced or coerced to have an abortion.

Bill to phase out personal property tax

State lawmakers have approved a plan to phase out Michigan’s tax on industrial and business equipment. Local governments rely heavily on the tax to provide services. The bill is headed to Governor Snyder's desk. The measure would also make up for 80-percent of funding for non-essential services.

Emergency manager bill

The Michigan Legislature has sent Governor Rick Snyder a new local government emergency manager bill -- five weeks after voters rejected their last effort. The new law will give local governments in financial trouble some options. They can negotiate an agreement with the state, accept an emergency manager, or go a federal bankruptcy court.

Michigan Municipal League

A plan to phase out Michigan’s Personal Property Tax—the tax on business equipment—is being rushed through the Michigan Legislature.

There are unanswered questions and not much time to get answers.

Businesses want to end the tax on equipment. The problem is many local governments rely heavily on that tax.

When a proposal was announced last week, it appeared phasing out the tax over ten years and a statewide vote to replace it with the state’s current use-tax revenue might work to replace the local governments’ lost revenues.

User: Brother O'Mara / flickr

Snyder wants to phase out property tax

Governor Rick Snyder and Lieutenant Governor Brian Calley want the Legislature to enact a major tax overhaul before the end of the year. It would phase out Michigan’s tax on business and industrial equipment.

As the Detroit Free Press reports,

"The state's plan is to get rid of the tax on business equipment, furniture and supplies that brought in more than $1.2 billion in 2010, the most recent figures available, over the next 10 years. . . The phase out of the tax would begin in 2014 for small businesses and in 2016 for larger manufacturers. There would be no reimbursement to communities where personal property tax revenues are less than 2.5% of their total taxable value."

Southeast Michigan transit authority passes in Senate

Legislation to create a regional transit authority for southeast Michigan won approval from the state Senate Tuesday. As the Detroit Free Press reports,

"The goal, backed strongly by Gov. Rick Snyder and Detroit Mayor Dave Bing, is a network of speedy, modern buses operated independently of Detroit Department of Transportation and the Suburban Mobility Authority for Regional Transit. The plan is to give the transit authority the power to coordinate routes between the rapid-transit system and the existing city and suburban bus lines to eliminate duplication of routes. DDOT and SMART would instead feed into the faster bus lines, freeing up both to provide better, more efficient local service."

Ex-aids to former Detroit Congressman enter pleas in petition fraud

"A former top aide to a Detroit-area congressman has pleaded no contest to forgery in an election scandal involving bogus petition signatures. Don Yowchuang was deputy district director to then-U.S. Rep. Thaddeus McCotter, a Republican from Livonia. Yowchuang admits making copies of petition signatures to try to qualify McCotter for the August primary election. Separately, McCotter former district director Paul Seewald pleaded guilty to a misdemeanor, falsely signing a nominating petition as a circulator. McCotter didn't make the ballot and quit Congress in July," the AP reports.


User: Brother O'Mara / flickr

Detroit deadlock continues

Detroit needs cash if it's going to make payroll in December. $30 million waits from the state.

But Mayor Bing and the Detroit City Council are locked in a battle over a law firm contract. A special council meeting was supposed to be held yesterday to resolve the problem, but the the city's legal department canceled the meeting.

Even it the meeting had been held, Matt Helms of the Detroit Free Press reports, Bing would not have had the votes to end the deadlock.

Had a vote been taken, it likely would not have gone Bing's way. The sole council member to vote to approve it, President Pro Tem Gary Brown, said Monday that the Bing administration "doesn't have the votes" to reverse course.

And the city's financial crisis looms.

Legislature aims to cut a source of revenue for some cities

There have been a lot of proposals floated in this lame-duck session of the Michigan legislature, but one plan the Gov. hopes to pass by the end of the year is a phase out of the "personal property tax."

That's a tax that many manufacturers pay to local governments on equipment they own. Local governments that have a big manufacturing base have said eliminating the tax would hurt their bottom line.

MLive's Dave Eggert reports Lt. Gov. Brian Calley plans to unveil a new plan to cut the tax today:

Sources who have been briefed on the proposal said key changes include partially replacing the revenue with a portion of the state's tax on out-of-state retail transactions and allowing local governments to assess a special tax to recoup money for police, fire and ambulance services.

Troy breaks ground on new transit center

The city of Troy is breaking ground on a new transit center today. The project was opposed by Troy's recently recalled Mayor, Janice Daniels, because the funding for the project is comging from the federal government. The transit center will cost $6.3 million to build and will house facilities for bus, train, and car rental services. The transit center will replace Birmingham's Amtrak stop. It's expected to open the summer of 2013.

User: Brother O'Mara / flickr

Proposed changes to K-12 education

There's a proposed bill being drafted that could make some major changes to K-12 education in Michigan. As the Detroit Free Press reports, highlights of the bill include, "[the ability for] students to choose school districts, make greater use of online learning and earn financial incentives of $2,500 per semester for completing high school early."

Charter school enrollment rises in Michigan

"Charter schools are becoming a more common choice for Michigan students. A new report finds five Michigan cities are now among the top 20 in the nation for the percentage students in charter schools. Detroit is No. 2 -- with 41 percent of its students enrolled in charter schools. Flint ranks fourth and Grand Rapids is ninth. Lansing and Traverse City are 19th and 20th,' Rina Miller reports.

Local government leaders want Michigan's personal property tax changed

"A new poll shows local government leaders in Michigan are leery of proposals to do away with Michigan’s personal property tax. Republican state lawmakers want to repeal or greatly change the tax, possibly before the end of this year. Businesses complain the personal property tax is cumbersome and discourages investment.  Legislation repealing the personal property tax already passed in the state Senate, but the legislation has sat in state House since last Spring," Steve Carmody reports.

Steve Carmody/Michigan Radio

A new poll shows local government leaders are concerned about proposals to repeal or greatly change Michigan’s personal property tax.

Michigan’s personal property tax focuses on assets like furniture, equipment, computers and other temporary investments.

Businesses have complained for years about the personal property tax.  Critics complain the tax is an obstacle to reinvestment and attracting new investment to Michigan

But the tax generates hundreds of millions of dollars for local governments.

Sarah Cwiek / Michigan Radio

Governor Snyder has been busy touting Michigan as America’s “comeback state"--most recently at last week's Mackinac Island Policy Conference.

Unemployment is dropping as the US auto industry is booming again. And the state has a budget surplus for the first time in many years.

But many of Michigan’s local leaders say they’re not seeing any comeback.

Matthileo / Flickr

An election year tax cut could be in the offing for individual filers in Michigan.

State House Republican leaders want to bring that into the discussions on phasing out a tax on industrial equipment.

Democrats in Lansing have hammered Republicans with the complaint that tax reforms enacted over the past year and a half have all been directed at helping businesses, while many of the exemptions and deductions enjoyed by individual filers have been scrapped.

Lieutenant Governor Brian Calley says a tax rollback for individuals and families has not yet been put on the table, but he and Governor Rick Snyder are open to the idea if that’s what the Legislature’s GOP leadership wants.

Calley says he hopes a debate over reducing the income tax or some other tax cut for individuals does not slow down a tax rollback that would encourage more investment in manufacturing in Michigan.

Cedar Bend Drive / Flickr

The Michigan Senate has voted to phase out an industrial tax that’s a big revenue generator for school districts and local governments. Republicans amended their original plan to make sure much

of that money for local services and education would be replaced.

State Senate Majority Richardville says if money from the state falls below a certain level, communities could return to taxing industrial property.   

“It’s kind of a poison pill, as we call it in legislative jargon, where, if we don’t keep our promises than the whole program disappears, so it forces the state government to say we will keep you at the level we say it will,” Richardville says.

Richardville acknowledges there’s no way to guarantee schools and local governments won’t see some reductions. The money for the replacement would come from the sunset of other tax breaks.

Republicans say Michigan’s tax on business and industrial property is unique in the Midwest and drives investment elsewhere.

The Senate rejected efforts by Democrats to link the tax phase-out to job creation targets.

The Michigan legislature will soon vote on whether to shift more of the state’s tax burden from business to households.  Last year the legislature and the governor shifted about one-and-a-half billion dollars in tax payments from small and medium sized businesses to retirees and the working poor. This year there’s a proposal to cut another business tax. That proposed tax cut could mean higher real estate taxes for homeowners and revenue cuts to local governments.

IBM / The News Market

Every Thursday we take a look at Michigan politics with Susan Demas, political analyst for Michigan Information and Research Service, and Ken Sikkema, former Senate Majority Leader and Senior Policy Fellow at Public Sector Consultants.

There’s an eight-bill package working its way through the legislature right now aimed at eliminating the personal property tax. This sounds like something that would affect individuals but this is actually a business tax.

Sikkema says, “This is basically a tax on business equipment, computer, office furniture and manufacturing equipment. It’s generally acknowledged to be a bad tax because it taxes new business purchases and business growth and investment.”

Demas indicates that some cities receive up to 40% of their tax base from the personal property tax. However, not all cities would be affected in the same way. Some cities wouldn’t be affected at all.

“The municipalities have been looking for ways that they can get some of that revenue replaced, but so far they haven’t had a lot of takers because their solution is a constitutional amendment that would guarantee the same money, and nobody really wants to tie the legislature’s hands with that," she says.

Sikkema believes eliminating the tax is a good move for Michigan. He says, “Other states, particularly in the Midwest have already eliminated it, principality Ohio. Michigan and Indiana are the only ones in the Great Lakes region that I’m aware of who currently collect the personal property tax.”

But he adds, “It’s not without its down side…for some it is a major source of revenue and republicans are trying to address that with this promise to replace it in the future.”

Demas adds, “I do think we do need to pay attention to however many communities there are that really rely on this and could be pushed over the edge, because certainly it’s not health for our state to have our cities keep getting financial managers.”

If you had any doubts whether Michigan is still an important player on the national stage, consider this. Yesterday, embattled Wisconsin Governor Scott Walker, who is trying to survive a recall, appeared at a fundraiser in the Detroit suburb of Troy.

Today, President Obama will visit fundraisers of his own in West Bloomfield. These men are about as different politically as possible. Walker is seen by the nation's unions as Public Enemy Number One. Those unions will be firmly behind the President's re-election. Obama and Walker differ on virtually every domestic issue.

But they do have something in common. Neither man was scheduled to visit the desolation that is Detroit.

That city's more conservative paper, The Detroit News, startled me today by suggesting that the President's limousine take a detour through the city, perhaps, "past the heaps of rubble that were once businesses on Harper near City Airport, and into the blocks surrounding Denby High School off East Outer Drive, where there are more abandoned homes than occupied ones."

The newspaper suggested that Detroit is every bit as bad off as New Orleans was in the wake of the devastation caused by Hurricane Katrina. But there have been no massive federal programs to rebuild Detroit. This nation has spent billions of dollars on the war in Iraq over the last decade, a war that seems to have won us nothing. Can you imagine the positive effect a small fraction of that money would have had on Detroit? Or Flint, or Pontiac, or any number of the rest of Michigan's crumbling cities large and small?

Ifmuth / Flickr

Every Wednesday, we take a look at the week's state politics with Michigan Radio's Political Analyst Jack Lessenberry. This morning: state lawmakers are back in Lansing after a two-week spring break, an overhaul of the state's Personal Property Tax could be coming, and President Obama is set to spend this evening fundraising in Southeast Michigan.

(photo by Steve Carmody/Michigan Radio)

The Michigan Chamber of Commerce hopes the legislature will pass several pro-business laws before election year politics starts throwing obstacles in the way this year.   

Rich Studley is the president of the Michigan Chamber of Commerce. He said there’s probably only a small window before this year’s elections start affecting the ability of the legislature and the governor to get any work done.   

"We believe that between now and the May filing deadline …between now and the end of May and the start of June…there are five months that the legislature and the governor can still work on key issues," said Studley.    

The chamber is pushing for the elimination of Michigan’s ‘personal property tax’ and would like to streamline environmental and other regulations.    

The state’s largest business industry group is also encouraging the governor to move ahead with plans to build a new bridge between Detroit and Windsor, even  if he has to do it without the legislature’s approval.  

One major issue not on the state Chamber of Commerce’s agenda is ‘Right to Work’. Chamber officials say their members have not reached a consensus on the issue.  More than 20 states prohibit agreements between employers and unions that require workers to join the union or pay union dues.

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