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• Introduced by Sen. Bill Hardiman (R) on December 2, 2003, to exempt the owner of a "qualified start-up business" from paying state income tax on earnings from the enterprise for five years. A "qualified start-up business" is defined as a firm that has fewer than 25 full-time equivalent employees, has annual sales of less than $1 million, has research and development expenses that make up at least 15-percent of its annual expenses, and is not publicly traded. This does not necessarily apply only to new firms, and the five year exemption is not necessarily the firm's first five years of operation.
  • Referred to the Senate Finance Committee on December 2, 2003.
  • Referred to the Senate Economic Development, Small Business and Regulatory Reform Committee on December 10, 2003.
    • Reported in the Senate on December 11, 2003, with the recommendation that the bill pass.
  • Substitute offered in the Senate on February 10, 2004, to replace the previous version of the bill with one that somewhat narrows the definition of qualified start up business to only include firms that did not have net income for two consecutive tax years. The substitute passed by voice vote in the Senate on February 10, 2004.
  • Substitute offered by Sen. Alan Sanborn (R) on February 11, 2004, to replace the previous version of the bill with one containing technical changes that do not affect its substance as previously described. The substitute passed by voice vote in the Senate on February 11, 2004.
  • Amendment offered by Sen. Gilda Jacobs (D) on February 11, 2004, to establish that if the qualified start-up business leaves Michigan within three years after getting the tax credit, it must pay a proportional amount of the taxes it would have paid without the credit. The amendment passed by voice vote in the Senate on February 11, 2004.
• Passed 38 to 0 in the Senate on February 11, 2004, to exempt the owner of a "qualified start-up business" from paying state income tax on earnings from the enterprise for five years. A "qualified start-up business" is defined as a firm that has fewer than 25 full-time equivalent employees, has annual sales of less than $1 million, has research and development expenses that make up at least 15-percent of its annual expenses, is not publicly traded, and did not have net income for two consecutive tax years. This does not necessarily apply only to new firms, and the proposed five year exemption is not necessarily the firm's first five years of operation.
  Who Voted "Yes" and Who Voted "No"
• Received in the House on February 11, 2004.
  • Referred to the House Commerce Committee on February 11, 2004.
  • Referred to the House Tax Policy Committee on February 12, 2004.
  • Reported in the House on April 21, 2004, with the recommendation that the substitute (H-2) be adopted and that the bill then pass.
  • Substitute offered in the House on April 27, 2004, to replace the previous version of the bill with one that incorporates certain additional restrictions and requirements designed to more narrowly target the tax breaks at certain kinds of businesses, and make it harder for non-targeted firms to make themselves eligible by changing their business structure. The substitute passed by voice vote in the House on April 27, 2004.
  • Amendment offered by Rep. Lorence Wenke (R) on April 27, 2004, to tie-bar the bill to House Bill 5331, meaning this bill cannot become law unless that one does also. The amendment passed by voice vote in the House on April 27, 2004.
• Passed 81 to 26 in the House on April 27, 2004, to exempt the owner of a "qualified start-up business" from paying state income tax on earnings from the enterprise for five years. A "qualified start-up business" is defined as a firm that has fewer than 25 full-time equivalent employees, has annual sales of less than $1 million, has research and development expenses that make up at least 15-percent of its annual expenses, is not publicly traded, and did not have net income for two consecutive tax years. This does not necessarily apply only to new firms, and the proposed five year exemption is not necessarily the firm's first five years of operation.
  Who Voted "Yes" and Who Voted "No"
• Received in the Senate on April 28, 2004.
• Passed 38 to 0 in the Senate on May 13, 2004, to concur with the House-passed version of the bill.
  Who Voted "Yes" and Who Voted "No"
• Vetoed by Gov. Jennifer Granholm on May 28, 2004.