Posted by Rick Wilson The Grand Rapids Press
April 25, 2008 17:10PM
GRAND RAPIDS - Estimated taxes due this month under the new Michigan Business Tax ignited an outcry of angry protests from businesspeople Friday, many of whom say they now prefer the once hated Single Business tax instead.
About 100 business owners, developers, and accountants testified before a panel of four Republican legislators bent on reforming the state's business tax code.
Michael DeVries, director of development and sales at Ed DeVries Properties Inc. in Grand Rapids, drew thunderous applause when he called for repealing the tax altogether.
"This tax is crushing small business," said DeVries, adding his tax liability has risen at least 50 percent. "We can talk about fixing it but the Michigan Business Tax really just needs to go away."
Perhaps the most impassioned plea came from Ron Koroleski, operator of Professional Property Maintenance, who called for Lansing to toss the new tax and cut the state budget. The 50-year-old Hudsonville man said his tax bill rose to $15,500 from $6,000. "I work 80 to 90 hours a week and I have four kids in college," he said. How can he absorb such a huge increase, he asked. "I can't pass this cost onto the little old lady who is paying me $5 to change her light bulb."
State representatives Dave Agema, of Grandville, Dave Hildenbrand, of Lowell, Arlan Meekhoff, of Olive Township and Tom Pearce, of Rockford, organized the event to gather ammunition for their fight to repeal or at least modify the tax.
The stage was decorated with a photo of billboard that said "Come on in for low taxes, businesses and housing costs -- Indiana."
Businesspeople said that the new tax -- both expensive and confusing -- is driving businesses away and keeping others from investing in Michigan.
Agema said his office has been inundated with calls from business people in recent weeks, saying the new tax, effective Jan. 1, is costing in some cases between 300 and 700 percent more than the old Single Business Tax or SBT.
The SBT was repealed last year and replaced with the MBT which is hybrid that taxes both gross receipts and business income. Lawmakers also tacked on a 22 percent surcharge on the amount, after an uproar over a service tax that was withdrawn.
"Without the surcharge, about as many people paid more taxes as paid fewer taxes," Cynthia Knoll, a CPA with The Rehmann Group accountants told the lawmakers at the hearing in Loosemore Auditorium on Grand Valley State University's downtown campus.
What also irks businesspeople is that the tax is applied to gross sales whether firms are profitable or not. Businesses were also upset that the MBT even taxes the 6 percent sales taxes that stores and other businesses collect on behalf of the state.
"That's a tax on a tax," Agema said.
"Also, you could lose money and still have to pay taxes if you have any sales at all. We've lost more jobs to the surrounding states than we have to China and Mexico just because their tax structure and business climate is more attractive."
Agema said the SBT raised about $1.6 billion but the new MBT is now expected to raise about $3 billion this year.
Marc Gilbert, a Beene Gartner accountant, told the lawmakers that the state treasury department has not given out information on how much will be collected, but he expects the tax will raise "a whole lot more money than you know."
Most attending the hearing wondered when Lansing will understand that tax increases cost jobs. DeVries noted the effect of new tax incentives for movie makers now coming to the state.
"The week after it was passed we get, what 30 applications," DeVries said. "Why don't we get that? The concept is the same."
Taxed whether business show a profit and even on the 6% sales tax!
Is it any wonder that businesses are leaving Michigan?
And why do film makers, who do not live in Michigan, get tax incentives while Michigan citizens business owner see their tax bill increase over 50%?
According to the highly respected Tax Foundation, Michigan was ranked as having the 14th highest tax burden, but the increased levies have likely moved us into the 12th worst slot. Indiana ranks 25th and another popular outbound destination for Michiganders is Florida, which not only has a lower state and local tax burden than Michigan, it also has no individual income tax and a right-to-work law. http://www.mackinac.org/article.aspx?ID=9173
We need to join these State representatives in the fight to repeal this business killer tax!
Dave Agema, of Grandville, firstname.lastname@example.org
Dave Hildenbrand, of Lowell, email@example.com
Phone: (517) 373-0846
Toll Free: (877) DAVE-086
Arlan Meekhoff, of Olive Township firstname.lastname@example.org
Phone: (517) 373-0838
Toll Free: (888) 238-1008
Tom Pearce, of Rockford email@example.com
Toll Free:(888) 414-3684