Archived Story

State legislators explain tax proposals

Published 9:14pm Monday, October 10, 2011

BERRIEN SPRINGS — Local state legislators discussed getting rid of the state personal property tax, defended eliminating the Michigan Business Tax and addressed state and federal budget issues in front of Berrien and Cass County school officials Monday.
It took place at a legislative breakfast, held at the Berrien Regional Education Service Agency, featuring state Sen. John Proos and Reps. Sharon Tyler, Matt Lori and Al Pscholka. Clay McCausland, district representative for U.S. Rep. Fred Upton, was also in attendance.
There has been a recent push in the state legislature to reduce or eliminate the personal property tax (PPT) on machinery equipment in commercial buildings. The Michigan Association of School Administrators was critical of eliminating the PPT in a press release last month, arguing it would cost school districts and community colleges hundreds of millions of dollars.
Pscholka defended the potential legislation, arguing it would attract more businesses to the state.
“Does anybody think taxing of equipment of businesses creates jobs?” he said. “This is not a personal property tax…It’s a business machinery tax.”
Lori agreed but said the legislature needs to find a “steady and reliable” replacement for the revenue that would be lost from the repeal of the tax.
The legislators also defended the elimination of the Michigan Business Tax (MBT), legislation which the governor signed in May. Pscholka explained that before the tax’s repeal, businesses paid the personal income tax rate of 4.35 percent, plus the MBT and a 22 percent surcharge on top of that.
Now small businesses pay the flat rate of 4.35 percent, while bigger corporations pay a 6 percent corporate income tax, Pscholka explained.
“Now, they don’t need to hire accountants to help navigate our tax system,” he said.
Proos said the changes to the Michigan business tax structure are necessary.
“Our business tax model was not working,” he said. “Talk to those businesses that left the state.”
Tyler said she had a recent discussion with a business owner  who is  considering returning to Southwest Michigan with the repeal of the MBT.
The legislators also addressed a bill that would provide Michigan school districts more flexibility in using sinking fund dollars. Schools currently can raise revenue from voter-approved millages and set it aside in a sinking fund to purchase real estate and construct or repair buildings. The bill would allow districts to use the funds in more ways.
All the representatives in attendance were in favor of the bill, although Proos said it’s a long shot for it to be passed.
“My vote is a yes. We ought to have flexibility with sinking funds,” he said. “But the speaker voted against it in the past. It’s not looking good on that front.”
The congressional leaders  acknowledged difficult economic times are hitting schools hard and it could get worse.
“I’m no mathematician, but 1.5 trillion is a lot of money,” said Lori, referencing the  debt savings over a 10-year period  Congress’ “super committee” needs to find by November.
Lori said the federal cost cutting will likely trickle down to local schools, meaning more cuts could be on the way for Michigan public schools.

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