Structure of New Michigan Business Tax Released
Governor and Legislative leaders announced the structure of the new Michigan Business Tax in a concept paper and press release. It will be comprised of a modified gross receipts tax imposed at a 0.8% rate (sales minus purchases of tangible property) and a business income tax expected to be levied at 5%. Industrial corporations will see personal property tax relief of 24 mills in addition to a 35% refundable credit on any remaining industrial personal property. Commercial businesses will see 12 mills of personal property tax relief, equivalent to a 23% cut. Additionally, small businesses will have the option of paying an alternative tax at 1.85% in lieu of the MBT. Further, if the new MBT brings in a "certain amount" over the $1.9 billion for 2008, 2009 and 2010, half of the surplus will be refunded to businesses while the other half will be deposited in the Budget Stabilization Fund (BSF). Legislation outlining the new tax is anticipated next week.