This is becoming ridiculous. You are entitled to a deduction for the annual amount of wear & tear on a machine. This is a SUBJECTIVE valuation. To make it more concrete, the feds came up with a formula. As moronic legislators do, they play with this constantly with the false assumption that it might have some desireable effect on the economy.
This bill requires a separate subjective valuation for Michigan purposes. As if the value of an asset changed because it was in Michigan vs. Ohio! At best, it merely changes the speed of receiving this deduction. The total will be the same. What it does require is yet another separate calculation to keep track of, merely for Michigan purposes.
This requires separate tracking for book purposes, for federal tax, for alternative minimum federal tax, for earnings & profits related to federal tax, for MI tax purposes, not to mention a different valuation scheme altogether for personal property taxes.
Because of different values of assets, special rules are needed to calculate the effect of income taxes on income based on different valuations of an asset.
Do you citizens see any value to this silly dance at all? THERE IS NONE.
If the tax bill writers had any sense at all, they would simply require that depreciation for financial book reporting be the same as that used for federal & state tax reporting, however determined. The simplicity and time saved dancing around valuations would be incredible:
No cost of maintaining multiple asset values
No cost auditing those schemes.
No cost writing laws to temporarily encourage asset buying.
No cost writing laws to remove that encouragement
Better financial reporting (smoother income flows)
No cost to synchronize multiple jurisdictions valuations
No cost to develope 52 valuation schemes.
No boom/bust economies related to asset purchases
More useful allocation of accounting time.