LANSING, MI – March 10, 2009 – (RealEstateRama) — The Senate Finance Committee approved three measures Thursday that will reduce the tax burden on Michigan consumers, homeowners and small businesses. The cornerstone of the three bills is state Sen. Nancy Cassis’ legislation to provide business tax relief to small and growing businesses.
Senate Bill 69 would allow more small businesses to qualify for the 1.8 percent alternative profits tax by increasing the maximum officer compensation and adjusted business income barriers.
“This vital measure is designed to retain Michigan’s current jobs and jumpstart our economy to create new ones,” said Cassis, R-Novi. “As chair of the Senate Finance Committee, I have heard directly from small businesses that have seen their tax liability skyrocket under the Michigan Business Tax (MBT). Already struggling to make ends meet in a dire economy, their increased tax liability has forced them to scale back and cut jobs, move out of the state or close their doors. Turning around our state must start with bolstering our locally-owned small businesses that provide roughly 80 percent of the jobs in Michigan.”
The bill also would allow startup businesses to grow and prosper. It expands eligibility for the Michigan Entrepreneurial Exemption (ME-2) and extends the credit for an additional three years. This will permit a qualified business to eliminate its MBT liability attributable to increased employment costs through the 2013 tax year. Companies would need to create at least eight jobs and make a capital investment of $500,000.
Another measure, Senate Bill 191, would increase the homestead property income tax credit from $1,200 to $1,300 and allow more Michigan homeowners to qualify for the full credit. The bill also provides an additional $50 increase for seniors or totally disabled individuals and indexes the credit value to inflation.
“Under my legislation thousands of additional families will be able to qualify for the credit,” said Cassis, sponsor of SB 191. “This relief is a positive step in the right direction. It will pump life into our housing market and our economy at the same time.”
The third tax relief measure approved by the Senate panel was SB 201 sponsored by Sen. Alan Sanborn, R- Richmond, which would help reduce the cost of purchasing a new or used vehicle. Currently, when an individual buys a new or used automobile, the state sales tax is applied to the full sales price of the vehicle.
Under Senate Bill 201, the state’s six percent sales tax would be applied only to the difference between the price of a new car and the value of a trade-in. The bill would also apply to the purchase of a new or used boat, recreational vehicle, snowmobile or heavy machinery.
“This legislation will give Michigan consumers the same purchasing power as consumers in all of our neighboring states,” Cassis said. “The critical change could help boost automobile sales, but also help local businesses, like Michigan CAT. Bringing Michigan’s sales tax structure in line with 38 other states, including all of our neighboring states, will allow job providers, like Michigan CAT, to better compete.”
Mark MacGuidwin, the CFO and treasurer of Michigan CAT, testified before the Senate committee in support of the legislation. The company is a family-owned business located in Novi and sells and services construction machinery produced by Caterpillar, Inc.
All three bills now head to the full Senate for consideration.