Michigan's SBT

**maxx** · February-06-11, 06:56 PM

and the rationale behind it.
http://docs.google.com/viewer?a=v&q=...nnQO7nNL9SJuXA

"... THe basic premise underlying value-added taxation is relatively straight-forward: taxes should be treated as just another cost of doing business, and all business activity should be taxed at the same rate regardless of whether a firm earns profits..."

**maxx** · February-07-11, 12:19 PM

"...the revenue generated by the corporate income tax had fluctuated dramatically with the business cycle..." [p.12]

lincoln8740 · February-08-11, 08:04 AM

Originally Posted by maxx

and the rationale behind it.
http://docs.google.com/viewer?a=v&q=...nnQO7nNL9SJuXA

"... THe basic premise underlying value-added taxation is relatively straight-forward: taxes should be treated as just another cost of doing business, and all business activity should be taxed at the same rate regardless of whether a firm earns profits..."

Even the most ardent leftist socialist pinko whacko on this board would agree that taxing a company who LOSES money is quite silly.

**Detroitej72** · February-08-11, 10:51 AM

Originally Posted by lincoln8740

Even the most ardent leftist socialist pinko whacko on this board would agree that taxing a company who LOSES money is quite silly.

By that argument, anyone who is unemployed should not have to pay any taxes.

**ndavies** · February-08-11, 12:46 PM

Originally Posted by Detroitej72

By that argument, anyone who is unemployed should not have to pay any taxes.

People don't have to pay income taxes if they don't have any income. Businesses still pay property and sales taxes even if they don't make any money. No other state in the nation taxes their businesses in this way. It is one more reason for businesses to shun Michigan. Why move to a state where you have to pay income taxes even if you don't make any money.

lincoln8740 · February-08-11, 05:28 PM

Originally Posted by Detroitej72

By that argument, anyone who is unemployed should not have to pay any taxes.

on what planet do people live on that have no income have to pay taxes? What about that check that comes every month when you are unemployed?

lincoln8740 · February-08-11, 05:34 PM

Originally Posted by ndavies

People don't have to pay income taxes if they don't have any income. Businesses still pay property and sales taxes even if they don't make any money. No other state in the nation taxes their businesses in this way. It is one more reason for businesses to shun Michigan. Why move to a state where you have to pay income taxes even if you don't make any money.

Whenever I explain the portion of the MBT that deals with "gross receipts" to my out of state friends--they can't believe that a state like michigan that is just begging for new businesses would have such an idiotic law.

**maxx** · February-08-11, 05:52 PM

Originally Posted by lincoln8740

Even the most ardent leftist socialist pinko whacko on this board would agree that taxing a company who LOSES money is quite silly.

"... Chronic low profitability can result from...Disguising profits as wages or bonuses...

Third, firms which have in the past disguised their profits to avoid taxation are truly not low profit. The SBT will make it difficult to avoid taxation by hiding a firm's profits..."

**ndavies** · February-09-11, 09:43 AM

Originally Posted by maxx

"... Chronic low profitability can result from...Disguising profits as wages or bonuses...

Third, firms which have in the past disguised their profits to avoid taxation are truly not low profit. The SBT will make it difficult to avoid taxation by hiding a firm's profits..."

So you're punishing every business in Michigan and discouraging new investment in the state because of the accounting practices of a handfull of multi-state/multi-national corporations.

Personally I would rather have a facillity that didn't make any income and didn't pay any income taxes than no facillity at all. That facillity would pay property taxes and hire hundreds of workers. Those workers would be paying income taxes.

Your choice is to either accept the taxes the company is willing to pay or lose that factory to another state or even another nation.

**Detroitej72** · February-09-11, 09:58 AM

Originally Posted by lincoln8740

on what planet do people live on that have no income have to pay taxes?

Ever hear of that little tax known as a sales tax?

**maxx** · February-09-11, 10:31 AM

Originally Posted by Detroitej72

Ever hear of that little tax known as a sales tax?

Yes, a very regressive tax. Thank goodness, Common Cause came into Michigan and lobbied to keep food from being taxed.

ndavies: So you're punishing every business in Michigan and discouraging new investment in the state because of the accounting practices of a handfull of multi-state/multi-national corporations.

First of all, I'm quoting from a paper explaining the rationale for the SBT.

What you're describing is a race to the bottom. How low will wages have to go before some companies are satisfied? In The Real State of the Union, Maya MacGuineas reported in 2004 that corporate taxes used to account for 50% of tax revenues; now they account for 10%. And we had all the "growth" from 1982 until the crash in 2008. Only the "growth" was at the expense of organized labor and the middle class. Want to know the real expense? Read the verdict on Reaganomics at alternet.org.

**ghettopalmetto** · February-09-11, 10:53 AM

Originally Posted by ndavies

So you're punishing every business in Michigan and discouraging new investment in the state because of the accounting practices of a handfull of multi-state/multi-national corporations.

Where did we ever get this idea that taxes are "punishment"?

Starvation is punishing. Homelessness is punishing. Bankruptcy is punishing. Long-term illness is punishing. If you're paying taxes, you ain't doing so bad.

TAXES, on the other hand, are a cost of doing business. You want to prosper, you have to invest. If taxes are the only thing preventing you from making a profit, you might want to re-examine your piece-of-shit business model.

**gumby** · February-09-11, 11:35 AM

Originally Posted by ndavies

People don't have to pay income taxes if they don't have any income. Businesses still pay property and sales taxes even if they don't make any money. No other state in the nation taxes their businesses in this way. It is one more reason for businesses to shun Michigan. Why move to a state where you have to pay income taxes even if you don't make any money.

Last I checked people still have to pay property and sales tax even if they don't make money either. Go ahead and stop paying property taxes if you lose your job and see if they don't take your house.

**ndavies** · February-09-11, 12:09 PM

Yes, the rational for the tax was great. However it came with some very large unintended consequences. I was for the tax when it was proposed. It seemed like a great solution at the time. Unfortunately no other state or nation followed along with this great idea. It then left Michigan with one more huge impediment to economic growth. The MBT needs to go and we need to go back to taxing companies on the profits they make, Not the number of employees they hire or the capital investments they makes.

The MBT is very counter productive to the state of Michigan businesses.

The race to the bottom has always been in effect. To fear it is to not understand what made the United states of America what it is. It is the reason we no longer have a majority of the American population involved in agriculture. We have moved our population away from this low wage endeavor. It is one of the reasons we have a middle class that can afford all the wonderful things we purchase.

Companies will never be satisfied with their costs. It's part of the capitalistic game. If they become satisfied with their costs they would soon be out of business. Their competitors will never stop worrying about costs and will drive them out of business by lowering their costs and the final prices on their products. It's not just about increasing shareholder profit. It's about keeping product prices and quality in line with your competition.

If you want to bring business here, You must lower the cost of doing business here, You must have more productive workers. You don't have to underpay workers, You just need them to produce more final product per dollar payed.

America's greatness comes from the innovation of the next new thing rather than the continued production from the old played out industries. Michigan needs to incitivize the creation of the next new industry.

**ndavies** · February-09-11, 12:18 PM

Originally Posted by gumby

Last I checked people still have to pay property and sales tax even if they don't make money either. Go ahead and stop paying property taxes if you lose your job and see if they don't take your house.

That was exactly my point, Businesses should be treated exactly like people. If a business doesn't make any money they shouldn't have to pay income taxes. They would still need to pay property and sales taxes.

**ghettopalmetto** · February-09-11, 12:45 PM

Originally Posted by ndavies

If you want to bring business here, You must lower the cost of doing business here, You must have more productive workers. You don't have to underpay workers, You just need them to produce more final product per dollar payed.

They've been doing that exact same thing in the South for decades, yet still have to hand hundreds of millions of dollars in subsidies to companies to create the kinds of jobs that already exist subsidy-free in a place like Michigan.

Maybe that particular tax needs to be restructured, but tax rates aren't the end-all, be-all of economic development.

**ndavies** · February-09-11, 01:29 PM

I never said taxes were the only issue. Unfortunately, it's one of many issues preventing investment here. Businesses wouldn't worry about the taxes if benefits for being here outweighed this extra cost.

If state taxes were the only deterrent to investment here, Detroit's renaissance zones would be stuffed to capacity.

It seems completely insane to me that we offer huge Tax subsidies to lure out of state businesses here, while we continue to have a tax structure that inhibits the businesses that are already here from growing.

**maxx** · February-09-11, 01:33 PM

ndavies:

What middle class?

http://www.huffingtonpost.com/2010/0...itle=undefined

"The vast majority of people who file for bankruptcy are middle-class folks who can’t pay their bills because they’ve lost their jobs or been hit with high medical bills. In fact, a 2009 study by researchers at Harvard and Ohio University showed that health-care problems were the root cause of 62 percent of all personal bankruptcies in America in 2007. When the same researchers did this study across five states in 2001, health-care problems caused only 50 percent of bankruptcy filings. According to the American Bankruptcy Institute, America had 1.4 million personal bankruptcies in 2009, a 32 percent increase over the previous year. Put another way: Every thirty seconds, someone in this country files for bankruptcy in the wake of a serious illness." - Arianna Huffington, "Third World America"

"According to the White House, in 2004, the last year data on this was compiled, U.S. multinational corporations paid roughly $16 billion in taxes on $700 billion in foreign active earnings— putting their tax rate at around 2.3 percent. Know many middle-class Americans getting off that easy at tax time?" - Arianna Huffington, "Third World America"

**ndavies** · February-09-11, 02:17 PM

The huge american middle class. Have you ever lived in a foreign country? Do you understand how much better off we are when compared to other 1st world nations.

Our middle class is hugely more affluent than any other nations middle class.

**1KielsonDrive** · February-09-11, 02:20 PM

Originally Posted by lincoln8740

Even the most ardent leftist socialist pinko whacko on this board would agree that taxing a company who LOSES money is quite silly.

You must know me. Good description. But you forgot 'nutjob'. Anyway, taxing a company that's losing money isn't necessarily a bad idea. It depends on a lot of factors. It isn't as black and white as profit and loss because accounting is involved. Accounting can make a pig look good and a swan look bad. An example of accounting trickery is 'bankruptcy'. Bankruptcy used to be the end. Bankruptcy was a bad word. Bankruptcy was a shadow hanging over your head for a loooong time. You and/or your company were at the end of the line. That was it. Nowadays, bankruptcy is just another accounting maneuver to rid yourself of debt: pensions, loan obligations, labor contracts, etc. While our business community [[credit card companies, etc) were having their paid representatives [[congress) make it more difficult for citizens to declare bankruptcy, they were also making it easier for businesses to declare so they could shed debt that they'd incurred [[think of hundreds of millions of dollars of loans used to take over other companies, pay bonuses and fees and persuade boards to join in). Small businesses [[the title has been hijacked) are usually much less able to engage in this trickery because they just don't have the resources [[money) to engage large firms [[Arthur Andersen) to assist them in trickery. The problem with Michigan's SBT, as I see it, is I've never been able to figure out what it should be - amount wise. No matter how many times I've tried to figure it out, I end up sending it to my accountant. Too many factors. I should be able to sit down at the end of each month, look at my gross, calculate and pay. I have little problem with 'taxes'. I do have a problem with cutting 'taxes', which used to be spread around 'fairly' equally, and instituting 'fees' in their place. 'Fees' are things like speedtraps, unequal enforcement of laws, etc, designed to increase revenue to replace 'taxes'. Nowadays local jurisdictions are looking for ways to charge you for everything they used to do that was paid for by taxes. If you're unfortunate enough to have a fire or accident, you gotta pay up after you've lost your ass due to your misfortune. It's all a language game - marketing. Marketing being one of the largest businesses in the world, you know who's getting their message out.

**ghettopalmetto** · February-09-11, 02:28 PM

Originally Posted by ndavies

The huge american middle class. Have you ever lived in a foreign country? Do you understand how much better off we are when compared to other 1st world nations.

Our middle class is hugely more affluent than any other nations middle class.

Yeah, and we have to be more affluent. By the time we buy health insurance, fill the driving appendage with gas, put kids through college, and fund our retirements, we're flat fucking broke.

**gumby** · February-09-11, 03:14 PM

Originally Posted by ndavies

That was exactly my point, Businesses should be treated exactly like people. If a business doesn't make any money they shouldn't have to pay income taxes. They would still need to pay property and sales taxes.

Oh yeah, sorry misread your post.

But the "fact" that republicans keep espousing that Michigan businesses are over taxed in comparison with the other states is an outright falsehood. Check out this link http://www.taxfoundation.org/files/bp60.pdf to see what the non-partisan Tax Foundation has to say about the Michigan tax burden on businesses. It places Michigan as the 17th best Tax Climate for Business in the nation.

**ghettopalmetto** · February-09-11, 03:35 PM

Originally Posted by gumby

Check out this link http://www.taxfoundation.org/files/bp60.pdf to see what the non-partisan Tax Foundation has to say about the Michigan tax burden on businesses. It places Michigan as the 17th best Tax Climate for Business in the nation.

A bit more about the nonpartisam Tax Foundation:

What Do We Stand For?
As a nonpartisan educational organization, the Tax Foundation has earned a reputation for independence and credibility. However, it is not devoid of perspective. All Tax Foundation research is guided by the following principles of sound tax policy, which should serve as touchstones for good tax policy everywhere:

Simplicity: Administrative costs are a loss to society, and complicated taxation undermines voluntary compliance by creating incentives to shelter and disguise income.

Transparency: Tax legislation should be based on sound legislative procedures and careful analysis. A good tax system requires informed taxpayers who understand how tax assessment, collection, and compliance works. There should be open hearings and revenue estimates should be fully explained and replicable.

Neutrality: The fewer economic decisions that are made for tax reasons, the better. The primary purpose of taxes is to raise needed revenue, not to micromanage the economy. The tax system should not favor certain industries, activities, or products.

Stability: When tax laws are in constant flux, long-range financial planning is difficult. Lawmakers should avoid enacting temporary tax laws, including tax holidays and amnesties.

No Retroactivity: As a corollary to the principle of stability, taxpayers should rely with confidence on the law as it exists when contracts are signed and transactions made.

Broad Bases and Low Rates: As a corollary to the principle of neutrality, lawmakers should avoid enacting targeted deductions, credits and exclusions. If such tax preferences are few, substantial revenue can be raised with low tax rates. Broad-based taxes can also produce relatively stable tax revenues from year to year.

In other words, they're Flat Tax-ers.

http://www.taxfoundation.org/about/

**1KielsonDrive** · February-09-11, 04:00 PM

Originally Posted by ghettopalmetto

Where did we ever get this idea that taxes are "punishment"?

Starvation is punishing. Homelessness is punishing. Bankruptcy is punishing. Long-term illness is punishing. If you're paying taxes, you ain't doing so bad.

TAXES, on the other hand, are a cost of doing business. You want to prosper, you have to invest. If taxes are the only thing preventing you from making a profit, you might want to re-examine your piece-of-shit business model.

Yes. Absolutely correct. But the big bucks SPIN has been put on it. Anything we [[meaning they) don't like is punishment: taxes, gun control, abortions, code enforcement, etc.