Governor seeks to end perks for select industries

BY DAWSON BELL
FREE PRESS LANSING BUREAU

Gov. Rick Snyder's proposal to end a generous subsidy for filmmakers in Michigan has grabbed most of the headlines.

But his disdain for the fiendishly complicated Michigan Business Tax, with its special treatments in credits and exemptions, goes way beyond the film industry.

Snyder would rid the state's tax code of dozens of carve outs, including many designed to help a specific business.

Examples include Meijer, the Michigan International Speedway, pro sports complexes and the North American International Auto Show.

Even among those that benefit, it's hard to find ardent defenders of the tax.

Continued at: http://www.freep.com/article/2011032...ect-industries

I think that credits for various things are helpful, but it's also helpful to have a simpler more fair tax in general.

I think the tax should just be a bit higher so that it covers about the same [[a little more or a little less is fine).

Michigan Other Emerging Cities

Business tax 6% 4%
Incentives to relocate to no yes
Brownfield credits no yes
High wage credits no yes
Relocation and job creation credits no yes
Skilled workforce training programs no yes
Redevelopment assistance no yes
Aggressively pursuing outside relocation no yes
State actively involved in relocation efforts no yes

I guess if it directly does not effect anybody it really does not matter.

It sounds good to the ear, and works in theory. In practice and real world application, however, just about every state and their momma entices certain industries over others since the founding of the nation, and I personally don't think that's a bad thing. Targeted breaks/subsidies in certain places in the country have lead to innovations we'd have not seen otherwise because the industry and its capital would be too broad too pool into targeted research.

BTW, Michigan's tax climate is far more complicated than it's often protrayed, as this article by the Detroit Free Presses Chris Chirstoff shows:

Quote:

But Terry Conley, partner at tax specialist firm Grant Thornton in Southfield, said Michigan's taxes aren't that excessive compared with those in other states -- especially for manufacturers, when tax-reducing credits are considered.

Without those credits, he said, "We don't fare well. With them, we can compete with any state."
Still, Conley generally likes Snyder's plan. But their differing views of the current tax show the complexities of creating a more tax-friendly business environment.

...

Conley said the tax credits woven into the Michigan Business Tax [[MBT) keep the state tax competitive. Some of those credits should continue, he said, because without them, Michigan's business tax would remain moderate or even high compared with the tax in other states.
Gov. Rick Snyder would eliminate most of the credits.
"For the governor's plan to be successful, our overall tax structure must be very efficient, where you can say to a company looking to expand here, 'Look, our [[tax) incentives in this state are very minimal, but you don't need them because we're a low-cost corporate tax state.' "

...

I'm generally in favor of the simple 6% corporate tax, but getting rid of most or all credits sets back whatever advantage that would give. It's like a step forward and two back.

Quote:

Originally Posted by NorthEnder

"In practice and real world application, however, just about every state and their momma entices certain industries over others since the founding of the nation"

Incentives at the state level have been around for at most 80 years [[and about 50 years at the local level) but I can understand your confusion since most folks who believe in more and bigger government think the founding of our nation began with FDR's Inauguration.

Your selective quoting of the Freep article is also telling. You left out this part:

Quote:

"If you're a profitable company doing business in Michigan, compared to a lot of other states, the Michigan corporate tax burden is very competitive," said Conley, a partner at the tax and audit firm Grant Thornton in Southfield.
"If you're a company that loses money or has relatively low margins, then Michigan's corporate tax is generally quite high."

This is exactly why the MBT needs to be scrapped. It taxes things like the number of employees on the company's payroll, even if the company has had an unprofitable year. Of course, if your company is one of the beneficiaries of the state's attempt to pick business winners and losers, you will receive some balm from Lansing to make up for the pain inflicted by the MBT - if not, tough luck!

What if the state required all individual income tax filers to pay a minimum amount of income tax in each year that they worked at least one hour, regardless of the total amount they earned in that year? Wouldn't that be a regressive income tax? Yet that is very similar to how the current MBT is structured.

State government's most important economic task is to foster a healthy climate for all businesses over the long term - particularly when the government itself is not so healthy.

Quote:

Originally Posted by Mikeg

Incentives at the state level have been around for at most 80 years [[and about 50 years at the local level) but I can understand your confusion since most folks who believe in more and bigger government think the founding of our nation began with FDR's Inauguration.

Your selective quoting of the Freep article is also telling. You left out this part:

This is exactly why the MBT needs to be scrapped. It taxes things like the number of employees on the company's payroll, even if the company has had an unprofitable year. Of course, if your company is one of the beneficiaries of the state's attempt to pick business winners and losers, you will receive some balm from Lansing to make up for the pain inflicted by the MBT - if not, tough luck!

What if the state required all individual income tax filers to pay a minimum amount of income tax in each year that they worked at least one hour, regardless of the total amount they earned in that year? Wouldn't that be a regressive income tax? Yet that is very similar to how the current MBT is structured.

State government's most important economic task is to foster a healthy climate for all businesses over the long term - particularly when the government itself is not so healthy.

Yes, and most of those who think there should be no taxes [[infrastructure and services be damned, small government is the answer to EVERYTHING, etc..) beleive that the country started with Reagan's inauguration.

Your point is????