Introduced
by
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 profits tax provision.
Referred to the Committee on Finance
Reported without amendment
With the recommendation that the substitute (S-1) be adopted and that the bill then pass.
Substitute offered
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 by voice vote
Passed in the Senate 20 to 17 (details)
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 profits tax provision.
Referred to the Committee on Tax Policy
