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Sunday, July 27, 2014

Op/Ed: The Business Property Tax Measure, Michigan's Proposal 1 of 2014, is another Tax Shift disguised as Fathom Jobs

Photo Credit - ScootPeters.com
"To say that Michigan's Proposal 1 coming to an PRIMARY election ballot near you August 5, 2014 is a hot pile of stinking mess, is a understatement. Commercials are marketing pitches, whose core design is to make the business, product, person or entity appear to be the best option to take. 
Remember this statement when as a Michigan resident, you view the commercials sponsored by the States' Chamber of Commerce regarding how Proposal 1 of 2014 will magically create 15,000 jobs on its' own."
Why is Michigan's Proposal 1 of 2014 is a hot pile of stinking mess?

Problem One:

Well, a number of reasons but first and foremost, the appointed board who would decide where Usage Tax Funds are allocated. The Usage Tax in Michigan would increase on services such as renting a car, staying in a hotel room, receiving a haircut from a barber or hairdresser or buying equipment on Amazon.com.

Wait, buying equipment off of Amazon.com? Yes, that too as the State would ensure Amazon or any other e-commerce operated business charge the Michigan Sales Tax (6.0%), plus a new Usage Tax  Fee on equipment purchases made over the internet.

Back to the "Appointed Board" determining where revenue received by Proposal 1 of 2014 Usage Tax is allocated to municipalities throughout the state. Normally, state governmental units quasi "Appointed Boards" are made up of political operatives who someone owe a favor, or the appointees themselves owe many favors to the Appointing Official(s).

For Proposal 1 of 2014 behalf, if passed into law, the board members would be Appointed by the Governor in office at the time. Yet, another reason this Proposal is a deep, long pile of stinking hot mess, while taking a moment to reflect on the last three years of Republican controlled and operated State Government in Michigan.

Problem Two:

Michigan's Proposal 1 of 2014 tall tales claims of tax savings for alleged "small businesses" the propaganda filled commercials boasting loudly about on a TV screen near you, are not the only businesses who will be the benefactors' of this "tax break".


Say hello to large businesses, yet again, getting another tax break at our expense.

Why do you ask?

Well, state based C and S Corporations received -- thanks to Michigan's Governor Rick and his Republican controlled State House and Senate-- a tax break in 2011. In Michigan, $1.8 MILLION was taken from the School Aid Fund to give a tax break to classified C and S Corporations.

Meanwhile Seniors got a tax hike, you if own a home and making over $50K a lost to your Homestead Property Tax Credit occurred, poor and lower middle class working Michiganders loss all but $50.00 of Michigan's Earned Income Tax Credit from a maximum of $650 to $50 bucks, the States' Donation Credit went bye-bye and on and on.

Oh and Michigan's Shared Revenue for municipalities was cut, yet again.

Problem Three:

When you hear code words "Double Tax for Businesses in Michigan", the only businesses that might be impacted by a Double Business Tax in Michigan's is real, small businesses. Small businesses typically classified by the tax code as Limited Liability Corporations (LLC) and Sole Proprietorship's (SP's) continue to be subject both, to a income tax on business revenue and business property tax on Michigan's Tax Returns.

Even in this case, these small business can and often do, deduct the depreciation on business property on the Federal Tax 1040 with a Schedule C form.

Problem Four:
This is another TAX SHIFT, to you.

According to the legislation all businesses either small, medium or large in size, would lose taxable credits on Michigan's Tax Returns. Tax revenue received over a 10 year period for full implementation of Proposal 1 of 2014 from these businesses, would go into the States' Usage Tax fund which is to be "shared" with local municipal units.

Ask Detroit how that sharing promise of the state revenue has "worked out" for them, as Michigan's largest city is in the midst of the largest U.S. municipal bankruptcy case ever? While claims continue to exist the State owes the "Motorcity" over $230 Million dollars of lost State Shared Revenue payments.

Furthermore, there is nothing in Proposal 1 of 2014 that stops another Republican or Democratic Legislature and Governor from drafting legislation to place the Business tax credits back in place, later.

Likely for instance, if state's large business lobbying organization, perhaps the Michigan Chamber of Commerce, decides at a future date to demand elected officials place back to State Compiled Laws one or more forms of State based business tax credits, for C and S corporations only. It has been done before, as in 2011, the large business lobby was successful in ending income business taxes on classified C and S corporations in Michigan.

That's should make you feel all warm and fuzzy inside.

Summary:


Research is necessary before taking a vote on Proposal 1 of 2014 before falling for the marketing commercials on this important issue.

Ask questions, many questions on how Peter will pay Paul after the current structure of how your Township, City, Village, County receives revenue from the State of Michigan, changes with this proposed legislation. If after asking questions and perform due diligence research, more questions than answers exist don't believe the claim what-so-ever of Proposal 1 of 2014 magically instant "creation" 15,000 new jobs in Michigan.

Didn't Rick Snyder promise "jobs" with the 2011 Tax Cut for C and S Corporations.


Where are those jobs exactly? According to the Bureau of Labor Statistics (BLS) July 18, 2014 report, Michigan has the fourth highest unemployment rate at 7.5% of all 50 states in the Union.

Michigan has been "reinvented", alright.

Into Governor Rick Snyder's (R) periled vision of making this states' Municipalities, Public School Districts, Seniors, Low and Middle Income Workers, Middle Income Homeowners pay more; while the large business owners and lobbying groups supporting him receive tax breaks as in Proposal 1 of 2014..




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