Possible Tax Structure Deal
June 13, 2007June 13, 2007. Legislative news service reports that the working group negotiating a deal on the new business tax has come to a tentative agreement that the new tax base will be a modified gross receipts tax and a business income tax. The gross receipts tax will generate two-thirds of the replacement revenue and the business income tax will generate one-third. The gross receipts tax will provide a deduction for tangible property purchases and be imposed at a rate of .75 percent. This is essentially the modified gross receipts base proposed in the Senate BEST plan. The business income tax is a tax on profits and will be imposed at an as yet unspecified rate. An alternative business tax would be made available for small businesses at a rate of 1.85 percent. New credits would be offered for compensation, investment and R&D in Michigan . Businesses would get a 35 percent personal property tax (PPT) credit. The PPT credit for commercial businesses would be 23 percent. More detail is expected over the next few days.