Removal of the Personal Property Tax

Personal property tax reform is now in the Senate Finance Committee:

An 8 bill package  that would reduce the personal property tax for Michigan businesses was sent to the Senate Finance Committee.  Personal Property tax is the tax businesses pay on equipment they have for manufacturing products as well as small businesses that pay on counters and cash registers.  It is not REAL Property tax that both businesses and homeowners will continue to pay.

This 8 bill package was sponsored by Sen. Jack Brandenburg and would change personal property tax the following way:

• Effective December 31, 2012 any commercial or industrial business that have personal property valued at $40,000 or less will not pay taxes and will not file a return. This would eliminate 75-80% of returns that currently need to be filed.

• Effective December 31, 2015 all eligible industrial personal property bought after December 31, 2011 will not be taxable.

• Effective December 31, 2015 any personal property that is ten years old will no longer be taxed. This will continue each year until all property is tax exempt.

Senator Brandenburg told news organizations across the state on Tuesday that  “This is a major step in the right direction toward long term prosperity for Michigan businesses.  Businesses owners already had to pay taxes on the property when they bought it the first time; there is no reason they should have to pay a second tax.”

This plan is a phase out plan and many of the changes will not take place until economic development incentives expire in 2016.  Most of those tax credits that will expire in 2016 involve MEGA tax break and battery tax credits.  When these credits expire that state will receive more revenue from the taxes on those businesses.

Most surrounding Great Lake states removed personal property taxes years ago to allow for businesses to invest in new equipment and product lines.

Information on the bills that were introduced:

SB 1065 (Brandenburg) Economic development; plant rehabilitation; eligible manufacturing personal property abatement; extend.  PA 198

SB 1066 (Robertson) Economic development; other; eligible manufacturing personal property abatement for technology parks; extend.   Technology Park Development Act

SB 1067 (Caswell) Property tax; exemptions; existing exemptions for industrial personal property; continue. General Property Tax Act / Next Michigan Development Corporation
SB 1068 (Robertson) Economic development; enterprise zones; eligible manufacturing personal property abatement; extend. Enterprise Zone Act

SB 1069 (Hildenbrand) Property tax; personal property; new industrial personal property; exempt.    General Property Tax Act

SB 1070 (Nofs) Property tax; personal property; less than certain value; exempt.   General Property Tax Act

SB 1071 (Nofs) Property tax; personal property; industrial personal property; exempt.   General Property Tax Act

SB 1072 (Brandenburg) Taxation; other; reimbursement for revenue lost as a result of personal property exemption; provide for.  Creates new act:  Personal Property Tax Exemption Reimbursement Act