Compared with what his company paid under Michigan's hated Single Business Tax, Bronner's will pay about 500% more now under the new Michigan Business Tax, a supposed improvement over the SBT that took effect Jan. 1.
The increase includes a surcharge approved late last year so the state wouldn't go broke. The shock to businesses looking at their new tax liability could reopen the political debate over the state's business tax system and, even more broadly, Michigan's budget and fiscal policies as a whole.
"We've always been more than willing to pay our fair share of taxes here," Bronner said. "But it seems like a disproportionate amount has hit industries like us."
James Jenkins, a Southfield accountant, said last week that he's facing an even stiffer bump in his business taxes, from $1,000 a year under the SBT to $14,000 a year under the MBT.
"I've got clients that can move" out of Michigan, Jenkins said. "I suspect that some of them absolutely will if this becomes too penal."
Too much of a burden?
The increases stem in part from a shift in part of the tax burden from manufacturing firms to the state's growing service sector.
As part of Michigan's bitter, drawn-out debate last year on replacing the Single Business Tax, lawmakers in Lansing created the Michigan Business Tax to spread the tax burden more evenly. Manufacturers got some relief, while service firms were expected to pay more.
This spring, tens of thousands of firms are calculating their MBT bills to make estimated tax payments as required by law. "People are getting the first dose of the shock wave," Jenkins said.
State Rep. John Proos, R-St. Joseph, said Michigan could lose firms to other states, including nearby Indiana. The Hoosier state has begun to target Michigan firms with a marketing campaign to entice them to a less-taxing environment."This is at a time when Michigan's economy is struggling," Proos said. "Why would we simply take the arrows out of our quiver and give them to the State of Indiana to fire back at us?"
A couple of notesFirst, note that Ohio doesn't appear to be a viable option for Michiganders as a relocation option.
Second, if you are a "progressive" ask yourself this question. Are businesses more or less likely to set up in Michigan as a result of this tax?
The clue phone is ringing for Ohio, will the state pols like Marc Dann pull his pants up long enough to answer it?