Michigan Update Legislature Approves $600M Tax Relief Package

Following months of debate that ended in a veto last month by Gov. Jennifer Granholm, an agreement was made last week on a $600 million tax relief package for businesses, which now awaits the governor's anticipated signature. Gov. Granholm signed into law the $1 billion Job Creation Fund last month, but rejected a package of tax cuts over a disagreement on two of the bills (see the Dec.5 issue of the Digest).

According to an Associated Press article, one of the bills vetoed by the governor would have provided a 100 percent property tax credit in 2007 and 2008 for businesses that bring jobs into Michigan, although businesses that showed a net job loss because of cuts would not have qualified. Lawmakers changed the bill to allow the Michigan Economic Development Corporation to award the credits to companies with a net job loss by citing "extenuating circumstances."

The revised legislation sent to the governor would:

• Establish a refundable credit against the Single Business Tax (SBT) equal to 15 percent of property taxes paid on industrial personal property, beginning Jan. 1, 2006;
• Amend the Single Business Tax Act to provide taxpayers that transfer jobs into the state with a credit against the SBT equal to 100 percent of personal property taxes directly related to transferred jobs in 2007 and 2008. Transferred jobs must be in manufacturing or high-technology fields; and,
• Extend an SBT exemption to "spun off" corporations Delphi and Visteon, protecting them from a tax hike at the end of 2005.

The governor previously disagreed with lawmakers' decision not to repeal a law that will end the SBT in 2010 without replacement, but reform on that measure has been put off until next year, according to the Associated Press.

The tax relief bills, SB 203, 909-910 and HB 4982, 5459, and 5460-5461 are available through the Michigan Legislature at: http://www.legislature.mi.gov/mileg.asp?page=home