Small businesses tired of paying Michigan's 'double tax'

By: Tricia Harte Email
By: Tricia Harte Email

Companies in Michigan want to eliminate a double tax they feel hurts business. The effort has broad based support from St. Joseph Mayor Michael Garey, Benton Harbor Mayor James Hightower, local businesses, as well as local safety and community services.

Wednesday they joined together to urge the public to vote "yes" on Proposal 1 on the Aug. 5 ballot.

"The best part, it's not going to cost any more taxes for us," said Executive Vice President of Cornerstone Chamber of Commerce, Tammie Howard.

According to Howard and Michigan Citizens for Strong & Safe Communities, Proposal 1 serves two purposes: the first is to fix unfair business equipment taxes, and the second, attract more businesses to the area.

In Michigan, small businesses and manufacturers pay a six-percent sales tax on any equipment they purchase, they then pay tax based on the millage rate every year that they own it. This so-called "double tax" is actually a personal property tax on equipment, which small businesses say is "unfair."

"So the same would be true if you bought a piece of furniture for your home. You pay sales tax when you buy it, well imagine paying another tax every year that you own it. Some people own a sofa for 20 years, so it just doesn't seem fair, it doesn't make sense," said Stephanie Grill, from Harbor Town Interiors in the city of St. Joseph.

Supports of the proposals say, if passed, it would create a more business friendly atmosphere.

Currently, the personal property tax is collected by local municipalities--like the cities of St. Joseph and Benton Harbor--and can be an "unreliable" revenue stream according to Mayor Garey.

If Proposal 1 passes it reportedly guarantees that 100 percent of the funding for local community services will be returned to the community for police, fire, senior services, EMT, jails, schools, roads etc. according to the group Strong & Safe Communities.

When asked where municipalities will compensate for the lost revenue on personal property taxes, Garey said there have already been allotments of funds at the state level.

Michigan State legislature eliminated certain corporate tax loopholes statewide and established an Essential Services Assessment paid for by manufacturers that receive a Personal Property Tax reduction.

The "double-tax" on equipment is applied in Michigan, not Indiana. Officials in St. Joseph and Benton Harbor are worried that if it's not eliminated businesses might choose the Hoosier State as their location to avoid paying more in taxes.

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