Public Act 36 of 2007

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• Introduced by Sen. Nancy Cassis (R) on January 25, 2007, to adopt a new business tax. This is the Senate Republican proposal to replace the Single Business Tax. It would contain both a tax on business income (profits) and a tax on a firm’s gross receipts, but as introduced the bills do not specify the rates. Firms with gross receipts under $100,000 would pay no tax; from $100,000 to $350,000 would pay a $100 fee; from $350,000 to $15 million would pay their choice of a gross receipts or income tax; and above $15 million would pay both, but could choose the proportion of each within certain ranges. The package also contains a 10 percent credit for property tax paid on business equipment (“personal property”) acquired in the past five years, and exempts future industrial equipment acquisitions from this tax (but not other kinds of business equipment.) It exempts certain new firms from any tax for three years if they meet certain growth and employment targets, and has a provision to reduce the tax rates if the total revenue it takes exceeds $1.51 billion, adjusted for inflation plus 1 percent. This bill contains the gross receipts tax provision. The final version of this bill became the new "Michigan Business Tax".
  • Referred to the Senate Finance Committee on January 25, 2007.
    • Reported in the Senate on January 31, 2007, with the recommendation that the substitute (S-1) be adopted and that the bill then pass.
  • Substitute offered in the Senate on March 27, 2007, to replace the previous versions of the three bills in the package with new ones that establish the gross receipts tax at .55 percent and the profits tax at $1.5 percent, and revise a number of other details. Some of these include, the $100 fee on businesses with receipts under $350,000 is removed; the tax treatment of receipts between $15 million and $50 million is revised; a tax break for restaurants that ban smoking is proposed; the value of certain business tool and equipment tax credits (personal property tax) is increased; and other changes. The substitute passed in the Senate by voice vote on March 27, 2007.
  • Substitute offered in the Senate on March 29, 2007, to replace the previous version of the bill with one that adds a variety of additional tax credits and details to the proposal. The substitute passed in the Senate by voice vote on March 29, 2007.
  • Substitute offered by Sen. Nancy Cassis (R) on May 3, 2007, to replace the previous version of the bill with one that represents the "refined" final form of the proposal, based on input from the various particular interests affected by the proposed tax. See Senate-passed bill for details. The substitute passed in the Senate (21 to 16) on May 3, 2007. [Vote Details and Comments]
  • Amendment offered by Sen. John Pappageorge (R) on May 3, 2007, to establish that financial institutions would be subject to a 0.225 percent levy on capital or net worth. The amendment passed in the Senate by voice vote on May 3, 2007.
  • Amendment offered by Sen. Michael Prusi (D) on May 3, 2007, to raise the modified gross receipts tax rate to a level that would bring in the same amount as the current SBT, which would be an approximate $400 million increase over the proposed rate. The amendment failed in the Senate (17 to 20) on May 3, 2007. [Vote Details and Comments]
  • Amendment offered by Sen. Randy Richardville (R) on May 3, 2007, to authorize a business tax break for the Michigan Inter national Speedway in Jackson. The amendment passed in the Senate by voice vote on May 3, 2007.
  • Amendment offered by Sen. Randy Richardville (R) on May 3, 2007, to authorize business tax credits for contributions to colleges and universities, libraries, and public broadcasting stations. The amendment passed in the Senate by voice vote on May 3, 2007.
  • Amendment offered by Sen. Randy Richardville (R) on May 3, 2007, to authorize business tax credits for contributions to school and community foundations. The amendment passed in the Senate by voice vote on May 3, 2007.
  • Amendment offered by Sen. Roger Kahn (R) on May 3, 2007, to authorize business tax credits for certain apprenticeship programs. This carries over the treatment of these programs in the SBT. The amendment passed in the Senate by voice vote on May 3, 2007.
  • Amendment offered by Sen. Roger Kahn (R) on May 3, 2007, to authorize business tax credits for contributions of automobiles to organizations that provide cars to low income persons. The amendment passed in the Senate by voice vote on May 3, 2007.
• Passed in the Senate (20 to 17) on May 3, 2007, to adopt the Senate Republican SBT replacement proposal, which would take in $400 million less than the $1.9 billion the SBT now takes. The so-called “BEST” plan (Business and Economic Stimulus) would impose a 1.5 percent profits tax and and 0.54 percent modified gross receipts tax (sales minus purchases of tangible goods from other firms) on all businesses with more than $15 million in annual receipts. Firms between $350,000 and $15 million in annual receipts could elect to pay either the modified gross receipts or the profit’s tax (firms below that level are exemted.) Insurance companies would be subject to a 1.0735 percent premiums tax, and financial institutions to a 0.225 percent levy on capital or net worth. There would be a 25 percent credit against property taxes paid on industrial and commercial business tools and equipment (“personal property tax”), and going forward new industrial tools and equipment would be exempt from property tax. The proposal contains a variety of other credits for investments that create new jobs, for locating a headquarters in Michigan, small businesses, restaurants that prohibit smoking, and more. This bill contains the gross receipts tax provision. [Vote Details and Comments]
• Received in the House on May 3, 2007.
  • Referred to the House Tax Policy Committee on May 3, 2007.
  • Substitute offered by Rep. Steve Bieda (D) on May 23, 2007, to replace the previous version of the bill with one that essentially replaces it with the provisions of House Bill 4367, the House Democratic plan to impose a new business tax that takes in the same amount of revenue as the SBT. The substitute passed in the House by voice vote on May 23, 2007.
• Passed in the House (62 to 47) on May 23, 2007, to establish a new business tax that is essentially the same one as the House Democratic proposal contained in House Bill 4367. This would be a “revenue neutral” 6.95 percent profits tax and a 0.488 percent annual tax on a firm’s net worth. The action reportedly was taken primarilly to get the House and Senate-passed versions of a proposed SBT replacement plans into a conference committee and work out a compromise . [Vote Details and Comments]
• Received in the Senate on May 24, 2007.
  • Substitute offered by Sen. Nancy Cassis (R) on June 19, 2007, to adopt a substitute that deliberately creates specific "points of difference" with the House-passed version, so that the Senate can defeat it, thereby sending the bill to a conference committee to work out the remaining details related to an agreement in priniciple on the structure of a new business tax. The substitute passed in the Senate by voice vote on June 19, 2007.
• Passed in the Senate (20 to 18) on June 19, 2007, to concur with a House-passed version of the bill. The vote sends the bill to a House-Senate conference committee to work out the differences. Reportedly the sides have agreed in principle on the general structure of a new business tax, but many details remain to be worked out. The new tax would impose a .8 percent gross receipts tax a 5 percent profits tax on big business, a 1.8 percent profits tax on small business, and cuts in personal property taxes. [Vote Details and Comments]
• Received in the House on June 19, 2007.
• Failed in the House (0 to 104) on June 26, 2007, to concur with a Senate-passed version of the bill. The vote sends the bill to a House-Senate conference committee to work out the differences. Reportedly the sides have agreed in principle on the general structure of a new business tax, but many details remain to be worked out. The new tax would impose a .8 percent gross receipts tax a 5 percent profits tax on big business, a 1.8 percent profits tax on small business, and cuts in personal property taxes. [Vote Details and Comments]
• Received in the Senate on June 27, 2007.
• Passed in the Senate (32 to 3) on June 28, 2007, to create a new state business tax structure to replace the Single Business Tax. The new "Michigan Business Tax" has several components, many credits subject to many conditions, and in the aggregate will take as much or possibly more from businesses as the SBT. The main provisions are a .80 percent tax on a firm’s gross receipts, less purchases of tangible goods from other firms (but not services, with some exceptions); and additionally, a 4.95 percent profits or income tax. Business tools and equipments (personal property) would be exempt from 18 mills of local school tax (schools would get this money from the state instead). The “personal property” of industrial firms (but not other firms) would also be exempt from the six mill state school tax. Businesses with less than $20 million in sales would pay an alternative tax of 1.8 percent on profits, as long as profits and officer compensation do not exceed specified levels. Insurance companies would pay a 1.25 percent tax on gross premiums, and financial institutions a .235 percent tax on net capital. In general, the new system reduces taxes on industrial firms, small businesses that don’t exceed specified profit and officer compensation caps, and multistate firms based inside Michigan; and raises them on other types of business. House Bills 4369 to 4372 contain some of these provisions. [Vote Details and Comments]
• Received in the House on June 27, 2007.
• Passed in the House (75 to 34) on June 28, 2007, to create a new state business tax structure to replace the Single Business Tax. The new "Michigan Business Tax" has several components, many credits subject to many conditions, and in the aggregate will take as much or possibly more from businesses as the SBT. The main provisions are a .80 percent tax on a firm’s gross receipts, less purchases of tangible goods from other firms (but not services, with some exceptions); and additionally, a 4.95 percent profits or income tax. Business tools and equipments (personal property) would be exempt from 18 mills of local school tax (schools would get this money from the state instead). The “personal property” of industrial firms (but not other firms) would also be exempt from the six mill state school tax. Businesses with less than $20 million in sales would pay an alternative tax of 1.8 percent on profits, as long as profits and officer compensation do not exceed specified levels. Insurance companies would pay a 1.25 percent tax on gross premiums, and financial institutions a .235 percent tax on net capital. In general, the new system reduces taxes on industrial firms, small businesses that don’t exceed specified profit and officer compensation caps, and multistate firms based inside Michigan; and raises them on other types of business. House Bills 4369 to 4372 contain some of these provisions. [Vote Details and Comments]
• Signed by Gov. Jennifer Granholm on July 12, 2007.