Lawmakers consider personal property tax repeal

By SHANNAN O’NEIL
Capital News Service
LANSING- Some state lawmakers are considering a repeal of Michigan personal property taxes to save businesses money and time.
If they do so, “it’s going to be a significant blow to local government,” said Deena Bosworth, legislative coordinator of Michigan Association of Counties.
Entrepreneurs pay personal property tax on equipment purchases and additional taxes for 15 years while the equipment depreciates. Taxed items include: computer systems, desks, chairs, manufacturing equipment and phones.
“In a time that small business’ drive the economy, one more burden on us just makes it that much more difficult,” said Melissa Adelaine-Supernault, partner of Adelaine Construction, a family business in Harbor Springs.
The problem: Michigan counties get the money from the personal property tax. If the tax were removed, another source would have to be found for the $212 million annual collected by counties, Bosworth said.
“I think everyone in the U.S. needs to try to run their household, their community, their county, their state as a business,” Supernault said.
Gov. Rick Snyder in early October said there would not be a way to replace the entire revenue created from the tax.
“It’s a burdensome tax, I’ll give you that,” Bosworth said. But she said it is necessary until there is an alternative.
The Small Business Association of Michigan favors the repeal. An option is a slow phase out of the tax, allowing the government time to adjust, said David Palsrok, vice president of governmental relations at the Small Business Association of Michigan.
He wants the tax eliminated but is concerned that it not be replaced with something equally troublesome.
A repeal would relieve the stress to keep up with inventory throughout the year, he said. This affects manufacturing companies particularly because the tax is used on office supplies and manufacturing equipment.
The paperwork and inventory is more frustrating than the tax, Supernault said. “I don’t know how truthful a lot of people are on that because they don’t like the tax.”
There are about 35 states that have this tax but nearby Ohio, Wisconsin, Minnesota, Pennsylvania and Illinois do not, said Tricia Kinley, senior director of tax and regulation at the Michigan Chamber of Commerce who favors the repeal.
That makes it hard to compete for manufacturing jobs, Kinley said. Ohio eliminated the tax in 2009.
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