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You are Viewing an Archived IssuePosted: 07/30/14
Voters around Michigan will decide on Aug. 5 whether to eliminate the personal property tax and reorganize the state use tax.
(Observer file photo)
MI voters to decide on
Proposal 1 tax changes
by CHRIS GRAYMichigan residents will vote on a proposal Aug. 5 that would change how businesses are taxed.
Observer Staff Writer
Proposal 1 is asking voters to approve of eliminating the state's personal property tax and reimbursing local communities with a new tax for the revenue they lose.
Michigan is the only state in the region that taxes businesses for their equipment for as long as they own it. It taxes industrial and some commercial personal property such as machinery, furniture, computers and shelving.
The personal property tax is collected through local municipalities through millage rates.
Proposal 1 would eliminate the personal property tax, phasing it out by 2023 and replacing it with the state use tax to make up for 100 percent of any lost revenue.
The tax would be split between a new local community stabilization tax and a state share tax. The two taxes would be levied at a combined maximum rate of 6 percent, which is the current rate of the use tax.
A Local Community Stabilization Authority would be formed to administer the local community stabilization revenue. The authority would distribute revenue to local municipalities for funding school districts and police, fire and ambulance emergency services.
The Michigan Department of Treasury would determine the stabilization tax rate based on annual revenue targets. The 2016 goal is $96.1 million.
Additionally, manufacturers statewide will pay an essential services assessment to contribute to the lost revenue.
The reimbursements would be welcomed by communities that rely on personal property tax revenue. For instance, the Village of Romeo is slated to lose 34.2 percent of its revenue due to the tax's elimination.
Bruce Township would see a loss of 16.5 percent, while Washington Township would lose 3.95 percent.
Marie Alexander, a legislative analyst with Ford Motor Company, asked the Village of Romeo Board of Trustees on July 21 to support the proposal, saying it will provide a strong and consistent source of revenue.
"Ford Motor Company is sensitive to the fact that people are concerned about how the tax relief on businesses will impact local services," she said. "It is critical to note, however, that the lost revenue to local communities will be replaced and this will be done without a tax increase on individuals."
Village President Mike Lee said he didn't find it necessary to pass a resolution supporting the proposal, saying he would rather leave it in the hands of voters.
Ford Motor Company is the top donor for supporting the proposal's approval, contributing $2 million to the campaign.
According to Michigan Citizens for Strong and Safe Communities -- a committee supporting the proposal -- eliminating the tax would create up to 15,000 jobs and $450 million in additional investment.
The committee has raised $5.7 million for its campaign. The proposal hasn't seen organized opposition.
Proposal 1 would go into effect Jan. 1, 2015 if approved. The proposal was placed on the ballot due to Section 31 of Article IX of the Michigan Constitution, which states any new taxes must be approved by voters.