Introduced by Rep. Andy Coulouris (D) on October 31, 2007, to create a “vehicle” bill that could be used to raise certain rates, credits and refunds in the Michigan Business Tax by an amount determined to equal the revenue projected from the new 6 percent tax on many services, which presumably would then be repealed.
Referred to the House Tax Policy Committee on October 31, 2007.
Reported in the House on November 8, 2007, with the recommendation that the substitute (H-1) be adopted and that the bill then pass.
Substitute offered in the House on November 8, 2007, to replace the previous version of the bill with one that imposes a Michigan Business Tax surtax, as desribed in the House-passed bill. For more details see House Fiscal Agency analysis. The substitute passed in the House by voice vote on November 8, 2007.
Amendment offered by Rep. Kimberly Meltzer (R) on November 8, 2007, to repeal the service tax but not impose a Michigan Business Tax surcharge. The amendment failed in the House by voice vote on November 8, 2007.
Passed in the House (58 to 47) on November 8, 2007, to impose a 32.9 percent surcharge on businesses subject to the Michigan Business Tax, and repeal the new 6 percent tax on many services. After the 2008 tax year the surcharge would be 27.3 percent. The rate was determined by the desire to take in $614 million to avoid spending cuts in Fiscal Year 2008, and $750 million in 2009. Small businesses (gross sales below $10 million and earnings below $475,000) would be exempt, and there would be a $2 million surcharge cap on the amount of surcharge imposed on any particular company, so the the full surcharge rate would only be imposed on medium size firms. [Vote Details and Comments]
Moved to reconsider by Rep. Kathy Angerer (D) on November 8, 2007, the vote by which the House passed the bill. Note: Rep. Emmons missed the first vote, and voted "no" on the second. The motion passed in the House by voice vote on November 8, 2007.
Received in the House on November 8, 2007, to impose a 32.9 percent surcharge on businesses subject to the Michigan Business Tax, and repeal the new 6 percent tax on many services. After the 2008 tax year the surcharge would be 27.3 percent. The rate was determined by the desire to raise $614 million to avoid spending cuts in Fiscal Year 2008, and $750 million in 2009; small businesses (gross sales below $10 million and earnings below $475,000) would be exempt, and there would be a $2 million surcharge cap on any a particular company, so the the full surcharge rate would only be imposed on medium size firms. Passed in the House (58 to 48) on November 8, 2007. [Vote Details and Comments]
Received in the Senate on November 20, 2007.
Referred to the Senate on November 20, 2007.
Substitute offered in the Senate on November 20, 2007, to replace the previous version of the bill with one that imposes a 13.85 percent Michigan Business Tax surtax, as opposed to the 32.9 percent rate in the House-passed bill, and makes other changes. See Senate-passed bill. The substitute passed in the Senate (20 to 16) on November 20, 2007. [Vote Details and Comments]
Motion by Sen. Alan L. Cropsey (R) on November 20, 2007, that the previous question be ordered. The motion passed in the Senate (20 to 16) on November 20, 2007. [Vote Details and Comments]
Substitute offered by Sen. Michael Prusi (D) on November 20, 2007, to increase the cap on the amount of surchage imposed on any one company to $3.5 million. The substitute failed in the Senate (16 to 20) on November 20, 2007. [Vote Details and Comments]
Passed in the Senate (20 to 16) on November 20, 2007, to impose a 13.85 percent surcharge on businesses subject to the Michigan Business Tax, and repeal the new 6 percent tax on many services. The surcharge will take in approximately $560 million annually, replacing most of the $614 million to avoid spending cuts in Fiscal Year 2008, and $750 million in 2009 and 2010. There would be a $7.5 million cap on the amount of surcharge imposed on any particular company. A $219.4 million “windfall” the state expects from the transition from the old Single Business Tax to the new MBT would be used to reduce the surcharge rate; supposedly this money would otherwise go into the rainy day fund (although current revenue projections already fall short of desired spending in the next year). The surcharge would end after 2010. The bill also slightly eases officer and owner compensaton limits on firms qualifying for a lower small business MBT rate, and directs any MBT revenue increases to reducing the surtax. [Vote Details and Comments]
Motion by Sen. Alan L. Cropsey (R) on November 20, 2007, to give the bill immediate effect. The motion failed in the Senate (20 to 16) on November 20, 2007. [Vote Details and Comments]
Received in the House on November 20, 2007.
Amendment offered by Rep. Kenneth Horn (R) on November 28, 2007, to give businesses a tax credit equal to the amount they spent preparing to comply with the new 6 percent tax on many services the bill is intended to eliminate. The amendment passed in the House by voice vote on November 28, 2007.
Amendment offered by Rep. Steve Tobocman (D) on November 28, 2007, to tie-bar the bill to House Bill 5295, meaning this bill cannot become law unless that one does also. HB 5295 would impose new regulations on mortgage lenders. The amendment passed in the House by voice vote on November 28, 2007.
Substitute offered by Rep. Daniel Acciavatti (R) on November 28, 2007, to replace the previous version of the bill with one that authorizes new business tax credits for Michigan International Speedway and for the costs incurred by retailers complying with the bottle deposit law, and slightly expands eligibility for an alternative small business tax rate by relaxing certain executive and owner compensation caps. This substitute does not contain any surcharge. This substitute was adopted but then made moot when another substitute containing a surcharge was subsequently adopted. The substitute passed in the House by voice vote on November 28, 2007.
Amendment offered by Rep. Daniel Acciavatti (R) on November 28, 2007, to repeal the new 6 percent tax on many services, and not replace the revenue it would have taken in. Although the amendment was gaveled through on a voice vote, it was moot because minutes later the substitute version of the bill it amended was itself replaced by a substitute containing a business tax surcharge taking in all the money the service tax would have. The amendment passed in the House by voice vote on November 28, 2007.
Substitute offered by Rep. Paul Condino (D) on November 28, 2007, to impose a 25.7 percent surcharge on businesses subject to the Michigan Business Tax, and repeal the new 6 percent tax on many services. The surcharge will take in enough from firms doing business in Michigan to replace all of the $614 million the service tax would have imposed to avoid spending cuts in Fiscal Year 2008, and $750 million in 2009 and 2010. There would be a $4.75 million cap on the amount of surcharge imposed on any particular company. The surcharge would be permanent, and after 2008 the rate would be 23.4 percent. The substitute passed in the House by voice vote on November 28, 2007.
Passed in the House (57 to 44) on November 28, 2007, to impose a 25.7 percent surcharge on businesses subject to the Michigan Business Tax, and repeal the new 6 percent tax on many services. The surcharge will take in enough from firms doing business in Michigan to replace all of the $614 million the service tax would have imposed to avoid spending cuts in Fiscal Year 2008, and $750 million in 2009 and 2010. There would be a $4.75 million cap on the amount of surcharge imposed on any particular company. The surcharge would be permanent, and after 2008 the rate would be 23.4 percent. [Vote Details and Comments]
Received in the Senate on November 28, 2007, to concur with the House-passed version of the bill, which has a surcharge than the Senate-passed version which takes in all the revenue the service tax would have taken. Failed in the Senate (13 to 22) on November 28, 2007. [Vote Details and Comments]
Received in the Senate on December 1, 2007.
Motion by Sen. Alan L. Cropsey (R) on December 1, 2007, to reconsider the vote by which the House substitute was not concurred in. The motion passed in the Senate by voice vote on December 1, 2007.
Substitute offered by Sen. Jud Gilbert (R) on December 1, 2007, to replace the previous version of the bill with one that establishes a 21.99 percent surtax, and also makes various revisions to the Michigan Business Tax, including classifying income earned by a trust, and payments by theaters for the rental of films. The substitute passed in the Senate by voice vote on December 1, 2007.
Amendment offered by Sen. Jud Gilbert (R) on December 1, 2007. The amendment passed in the Senate by voice vote on December 1, 2007.
Passed in the Senate (33 to 4) on December 1, 2007, to impose a 21.99 percent surcharge on businesses subject to the Michigan Business Tax, and repeal the new 6 percent tax on many services. The surcharge will take in enough from firms doing business in Michigan to replace all of the $614 million the service tax would have imposed to avoid spending cuts in Fiscal Year 2008, and $750 million in 2009 and 2010. There would be a $6 million cap on the amount of surcharge imposed on any particular company. Around half of the $219.4 million “windfall” the state expects from the transition from the old SBT to the new MBT would be used to reduce the surcharge rate. The surcharge would end as of 2017 if aggregate personal income in the state had increased in the previous three years. If personal income was still falling, the higher business tax rate would remain. [Vote Details and Comments]
Received in the House on December 1, 2007.
Passed in the House (66 to 42) on December 1, 2007, to impose a 21.99 percent surcharge on businesses subject to the Michigan Business Tax, and repeal the new 6 percent tax on many services. The surcharge will take in enough from firms doing business in Michigan to replace all of the $614 million the service tax would have imposed to avoid spending cuts in Fiscal Year 2008, and $750 million in 2009 and 2010. There would be a $6 million cap on the amount of surcharge imposed on any particular company. Around half of the $219.4 million “windfall” the state expects from the transition from the old SBT to the new MBT would be used to reduce the surcharge rate. The surcharge would end as of 2017 if aggregate personal income in the state had increased in the previous three years. If personal income was still falling, the higher business tax rate would remain. [Vote Details and Comments]
Signed by Gov. Jennifer Granholm on December 1, 2007, the repeal of the 6 percent tax on many services passed on Oct. 1, 2007, which went into effect 16 hours before this gubernatorial signature, and imposition of a new 21.99 business tax surcharge.
1) michigan???? [by Anonymous Citizen on December 6, 2007] To all of you that voted her back into office, how can you justify your vote now. The state has been crippled even more, if possible. Businesses have been hit with this joke of a surcharge instead of fixing the real problems. I guess you all have forgotten who employees the citizens of Michigan, the businesses you just ran out of town. You think finding jobs was difficult before, well you haven't seen anything yet. The same business that also pays a large portion of taxes to this state, but a lot of them will now give that tax money to a different state. All of you women or men that voted for a women just because she was a women, you should have stayed home and not voted at all. The problems start at the top, the government. Reply
2) Interesting [by Anonymous Citizen on December 4, 2007] tate Budget Priority: Preserve Business as Usual
(Note: A shorter version of this commentary appeared in The Detroit News on Nov. 8, 2007.)
For the past year, the public was told that even with nearly $1.4 billion in new state tax hikes, severe cuts would still be required to "balance the budget." Surprise! The "deficit" turns out to have been a gap between expected revenue and the level of desired additional spending. The state will spend $900 million more this year than last, most of which is from state taxes and fees. The following items from the just-passed budget illustrate the overall pattern:
* Total prison spending will be $2.01 billion, compared to $1.94 billion enacted last year.
* The Department of Labor and Economic Growth will spend $1.30 billion, compared to
$1.23 billion enacted last year.
* $1.89 billion will be spent on universities, compared to $1.79 billion enacted the previous year.
* The Department of Community Health will spend $12.05 billion, compared to $11.02 billion enacted last year.
* The Department of Human Services (Welfare) will spend $4.59 billion, compared to
$4.47 billion enacted last year, and the department will gain 171 new employees.
There were a few cuts: Government arts grants will fall by $2 million, four prison facilities will close and a juvenile justice facility will downsize, to name a few. An attempt to contract out the state’s foster child and adoption services to private social service agencies will be implemented to some degree, but much less than was hoped for.
That half-a-loaf foster care reform is a good example of how the political establishment’s priorities are misplaced. Despite bipartisan recognition that money could be saved and better outcomes realized for children from troubled backgrounds, what appeared to trump everything else was the possibility that outsourcing could replace some 800 government workers. The same calculus has stymied every recent effort at bringing about transformational government restructuring, from prison privatization to devolving State Police road patrols to less costly county sheriffs.
The debate over these reforms is not ideological. Neither liberals nor conservatives benefit from paying corrections officers wages that an American Federation of Teachers survey shows are almost one-third above the national average for corrections employees.
The education of children is not advanced by granting school employees benefits so extraordinary that even a state panel chaired by former Govs. Jim Blanchard and William Milliken suggested they be scaled back. The public is not served by a budget that includes $150 million for raises to state workers —members of a class that on average already earns substantially more than Michigan residents in the private sector, even in many apples-to-apples job comparisons.
And Michigan’s economy is in serious trouble. Between 2001 and 2006, the real per-capita personal income of residents fell by 0.9 percent; nationwide, it rose by 5.3 percent.
The state’s inflation-adjusted gross domestic product actually shrank last year, and our
7.7 percent unemployment rate is the nation’s highest. Most sobering of all, there are indications that Michigan’s population may be beginning to fall, as has been happening in Detroit for several decades.
Michigan has become a poor state — and compared to the rest of the country, it’s getting poorer.
One would expect state government’s top priority to be finding ways to do more with less and make Michigan a place that encourages entrepreneurs and investors, rather than drives them away. However, the just-concluded budget saga demonstrates that the real priority is to preserve the government status quo, quite literally at all costs.
This raises a disturbing question: Who runs state government? Most people would answer "the governor," or "the Legislature," but lawmakers are beginning to look like the agents of a very different set of bosses — the state’s public employee unions. Michigan residents may not be aware of the powerful pressure these unions brought to bear in Lansing over the past year; those of us in Lansing saw it regularly in loud demonstrations, e-mail campaigns and uncompromising letters to legislators. When the governor announced her budget back in February, public-sector union members in T-shirts were already handing out fliers supporting tax increases as an alternative to budget cuts.
There are now indications that lawmakers may postpone some of the tax hikes passed a month ago. This is promising only if lawmakers genuinely reduce spending to lighten the burden on the residents they serve — not just obsess on the hardships that may be faced by public servants.
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Jack McHugh is senior legislative analyst for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.
3) In Defense of Our Governor [by beverlytran on December 3, 2007] I speak strictly with a non-partisan tongue when I say the position of State Chief Executive Officer has been stripped mined of authority. Inheriting a position that has had its authority involuntarily abjucated by Act 431 of 1984, et seq.in time... to transfer authority to "insubordinate" department heads, I do not see the justification of defamation for elected officials. I solely place the blame on citizens.
Perhaps, the state could utilize a portion of the new "strip mining" tax to fund civic education.