Proposal 1 in August
Believe it or not, August 5, primary election day is fast approaching! While you are researching your candidates and millage proposals, please don’t forget about a proposal on the ballot that is important to economic development.
Proposal 1 ballot language is as follows:
APPROVAL OR DISAPPROVAL OF AMENDATORY ACT TO REDUCE STATE USE TAX AND REPLACE WITH A LOCAL COMMUNITY STABILIZATION SHARE TO MODERNIZE THE TAX SYSTEM TO HELP SMALL BUSINESS GROW AND CREATE JOBS.
The Amendatory act adopted by the Legislature would:
1. Reduce the state use tax and replace with a local community stabilization share of the tax for the purpose of modernizing the tax system to help small business grow and create jobs in Michigan.
2. Require Local Community Stabilization Authority to provide revenue to local governments dedicated for local purposes, including police safety, fire protection, and ambulance emergency services.
3. Increase portion of state use tax dedicated for aid to local school districts.
4. Prohibit Authority from increasing taxes.
5. Prohibit total use tax rate from exceeding constitutional 6 percent limitation.
At the end you will be asked to vote “yes” or “no”. We hope that you will pull the “yes” lever on this issue.
The Board of Directors of the Lake Superior Community Partnership has spent many hours researching and debating this issue for over a year. Initially, we were not supportive of the proposal as it did not address the issue of lost tax revenue to our local municipalities. Since that time, mechanisms were added to create a stable, reliable funding system for our communities and the services we rely on. At that time, the LSCP board voted to support Proposal 1 and work with other stakeholders to educate our communities before they head to the polls.
The Michigan Citizens for Strong and Safe Communities does a great job of laying out the problem that Proposal 1 aims to correct:
“Currently in Michigan, all businesses must pay a personal property tax on every piece of equipment they own. So not only do small businesses pay the six percent sales tax when they purchase equipment, they also pay a personal property tax for every year they OWN the equipment. The tax level on business personal property is unique to competing for new businesses and jobs. This proposal would immediately eliminate the personal property tax on small businesses, and phase it out over nine years for larger businesses.”
Many communities rely on the money raised by the personal property tax to help fund services like education, police, fire and ambulance services even though it is an unreliable revenue source. This referendum guarantees that 100 percent of the money a community loses from the elimination of the personal property tax, will be replaced using the more stable State Use Tax.
The referendum, on the August 5, 2014 ballot, is not a tax increase. It is paid for by eliminating special corporate tax breaks the legislature has voted to end, and by establishing a statewide Essential Services Assessment paid only by manufacturers receiving a Personal Property Tax reduction. That will leave approximately $126 million that will come from the general fund to reimburse communities that the state has available because Michigan’s economy has improved and revenues have increased.”
As a matter of fact, their website has an incredible amount of information, frequently asked questions and additional resources to assist you.
For the LSCP, we see two distinct advantages of Proposal 1. First, it eliminates an unfair double tax for local small business and manufacturers on top of a difficult regulatory and reporting process. Those additional dollars may be used by the company to expand their products, services or workforce. It also makes us more competitive with other Midwest states that do not have this tax. Secondly, it creates a stable, reliable funding system to assist our communities in paying for essential services like police, fire, schools and jails. And the best news? It is all done without a tax increase!
Editor’s note: Amy Clickner is CEO?of the Lake Superior Community Partnership. Her twice-monthly column will address topics of interest to the local business community.