LANSING, Mich. – Companies that own the state's largest motor speedway, a grocery distributorship and a natural gas pipeline were among those testifying Wednesday against parts of Gov. Jennifer Granholm's proposed overhaul of the state's business tax structure.
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The companies and two large business groups told lawmakers they would be losers under the governor's plan. The hearing was the first in a series of 12 joint House-Senate committee meetings to review the proposal.
Granholm wants to decrease the Single Business Tax from 1.9 percent to 1.2 percent and give a personal property tax credit to companies with manufacturing and research and development property.
To ensure the state receives the same amount of tax revenue, the plan would impose a 2-percent tax on insurance premiums. It also would reduce the reliance on payroll and put more weight on profit – easing taxes on manufacturers but likely increasing them on service companies.
Charlie Owens, Michigan director of the National Federation of Independent Businesses, said the "revenue neutral" plan doesn't do enough to encourage job creation.
"This proposal plays one business sector off against another," he said.
Tricia Kinley, director of tax policy and economic development for the Michigan Chamber of Commerce, said too many job providers would pay more taxes under the Granholm plan.
The administration expects 72,000 businesses would pay less if the plan is enacted, while 22,000 businesses would pay more.
Kinley did applaud Granholm's proposed SBT cut and the tax credit for research and development.
"Unfortunately, the remaining proposals would substantially increase the tax burden on the rest of Michigan businesses," she told members of the House Tax Policy Committee and Senate Finance Committee.
Companies testifying against the business tax reforms included Michigan International Speedway, Spartan Stores and ANR Pipeline Co. They each said they would pay more taxes if Granholm's plan is approved.
Grand Rapids-based Spartan Stores estimated its tax bill could jump by more than $1.2 million, prompting at least one Democrat to wonder if the calculation was accurate.
Groups such as the Michigan Manufacturers Association and Big Three automakers are supporting the plan, and the Small Business Association of Michigan is backing parts of the proposal as a good start.
During the hearing, Republicans were sympathetic to the complaints of some businesses, saying government shouldn't pick winners and losers. Democrats defended the plan and said sectors such as the insurance industry aren't paying their fair share.
State Treasurer Jay Rising said Wednesday that the current tax code already picks winners and losers by putting more of the tax burden on durable goods manufacturers, something he said the governor's proposal would fix.
During separate appearances before the House and Senate in recent weeks, he said manufacturers need tax relief. The inequitable tax structure is helping to drive their jobs out of state, he said.
The state tax reform bills are Senate Bills 295-96 and House Bills 4476-77. Find more information about these bills on www.legislature.mi.gov
This article originally ran in the Detroit Free Press.