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2005 Senate Bill 633: Cut SBT tax rate

Public Act 216 of 2005

Introduced by Sen. Nancy Cassis (R) on June 22, 2005 To resume the gradual phase-out of the Single Business Tax (SBT) that was stopped by legislation passed in 2002. Beginning in 2006, the current 1.0 percent SBT rate would be cut by .1 percent each year until it is eliminated.   Official Text and Analysis.
Referred to the Senate Finance Committee on June 22, 2005
Reported in the Senate on June 23, 2005 With the recommendation that the substitute (S-1) be adopted and that the bill then pass.
Substitute offered in the Senate on October 25, 2005 To replace the previous version of the bill, and use it as a "vehicle" for a business tax cut proposal offered by Senate Majority Leader Ken Sikkema as an alternative to a larger tax cut passed by the House. The complete legislative package would lower the Single Business Tax rate from 1.9 percent to 1.84 percent, lower the “alternative” tax rate for small businesses from 2.0 percent to 1.7 percent, authorize an SBT credit against the personal property taxes paid by industrial businesses, reduce or eliminate various tax credits and deductions, and revise other details of this complex value added tax. Further tax cuts would be contingent on state tax revenues rising faster than the rate of inflation plus one-percent plus $50 million. State spending increases would be limited to the same amount, except that this spending limit could be waived by a simple majority vote in the House and Senate. Over six years, the net tax relief would be $483 million. The package is comprised of Senate Bills 633 and 634, and House Bills 4342, 4972, 4980, 5106, 5107, 5108, 5095, 5096, 5097 and 5098.
The substitute passed by voice vote in the Senate on October 25, 2005
Passed 22 to 16 in the Senate on October 25, 2005.
    See Who Voted "Yes" and Who Voted "No".
To lower the Single Business Tax rate from 1.9 percent to 1.84 percent, and make more restrictive the thresholds that allow a firm to use the alternative gross receipts tax calculation method, or to claim an "excess compensation" SBT credit. This becomes part of a business tax cut proposal offered by Senate Majority Leader Ken Sikkema as an alternative to a larger tax cut passed by the House.
Received in the House on October 25, 2005
Referred to the House Tax Policy Committee on October 25, 2005
Substitute offered by Rep. Fulton Sheen (R) on November 10, 2005 To replace the previous version of the bill with one that reflects the agreement struck between Gov. Jennifer Granholm and Republican legislative leaders to adopt modest business tax cuts and a scaled-down "21st Century Jobs Fund." See House-passed version for details. The complete package includes House Bills 4342, 4972, 5047, 5048, 5095-5098, 5106-5109, and Senate Bills 298, 359, 521, 533 and 633. The tax cut and business subsidy bills are all tie-barred together, meaning they all must become law or none do.
The substitute passed by voice vote in the House on November 10, 2005
Amendment offered by Rep. Fulton Sheen (R) on November 10, 2005 To not link the bill to Senate Bill 634, which would eliminate the weighting or apportionment of in-state payroll and property in the formula used to calculate a firm's Single Business Tax liability, and base the liability 100 percent on sales.
The amendment passed by voice vote in the House on November 10, 2005
Passed 104 to 1 in the House on November 10, 2005.
    See Who Voted "Yes" and Who Voted "No".
To reduce the Single Business Tax rate from 1.9 percent to 1.85 percent in 2009, and restrict the use of tax-reducing alternative gross receipts tax calculations and "excess compensation" credits. The bill is part of an agreement struck between Gov. Jennifer Granholm and Republican legislative leaders to adopt modest business tax cuts and a scaled-down “21st Century Jobs Fund." The package would also lower the SBT that businesses pay on their employee health insurance costs beginning in 2009; reduce the alternative SBT tax rate charged to small businesses from 2 percent to 1.9 percent; provide a refundable SBT credit against a portion of the property taxes paid on industrial tools and equipment; reduce but not eliminate the weighting of in-state payroll and property in calculating a firm's SBT liability; and offset these tax cuts by eliminating a number of existing tax credits and deductions. The net reduction in business tax burden over six years would be $472 million, or approximately two-tenths of one percent of state spending over that period. Full details of the deal are described by a Senate Fiscal Agency analysis (pdf).
Received in the Senate on November 10, 2005
Passed 34 to 4 in the Senate on November 10, 2005.
    See Who Voted "Yes" and Who Voted "No".
(same description)
To reduce the Single Business Tax rate from 1.9 percent to 1.85 percent in 2009, and restrict the use of tax-reducing alternative gross receipts tax calculations and "excess compensation" credits. The bill is part of an agreement struck between Gov. Jennifer Granholm and Republican legislative leaders to adopt modest business tax cuts and a scaled-down “21st Century Jobs Fund." The package would also lower the SBT that businesses pay on their employee health insurance costs beginning in 2009; reduce the alternative SBT tax rate charged to small businesses from 2 percent to 1.9 percent; provide a refundable SBT credit against a portion of the property taxes paid on industrial tools and equipment; reduce but not eliminate the weighting of in-state payroll and property in calculating a firm's SBT liability; and offset these tax cuts by eliminating a number of existing tax credits and deductions. The net reduction in business tax burden over six years would be $472 million, or approximately two-tenths of one percent of state spending over that period. Full details of the deal are described by a Senate Fiscal Agency analysis (pdf).
Signed by Gov. Jennifer Granholm on November 21, 2005 Except that the bill will NOT go into effect, because it and other tax cut bills were tie-barred to bills that were vetoed, meaning none can become law unless they all do. However, bills creating a new business subsidy program WILL go into law, because their tie-bar language was reportedly drafted incorrectly.

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