Michigan primary voters gave overwhelming support to Proposal 1, a statewide ballot proposition that will end a long-standing Michigan personal property tax on business equipment and manufacturing machinery.
Small businesses currently pay a Michigan personal property tax on industrial equipment, a practice that Michigan Gov. Rick Snyder has called “dumb.”
The passage of Proposal 1 will bring a 10-year phase-out of the personal property tax. Existing tax revenue will go to local governments to pay for municipal services like policing.
The state’s general fund, controlled by Michigan lawmakers, will take a hit thanks to the new law. In-state businesses – small and large – stand to benefit though. Detroit automakers for example, who still pay annual personal property tax on machinery purchased decades ago, will no longer be on the hook for those additional fees.
This means Michigan’s small businesses will stop paying property tax on their equipment, too. This includes items like office furniture, copiers, and other standard office equipment.
The change should make Michigan a more desirable place to do business. Ford, which has factories in neighboring areas such as Illinois, Ohio, and Ontario, doesn’t pay lifetime property tax on its machinery in those factories – and now the company won’t pay the price for their Michigan locations.
It seems the voters of Michigan, who approved the tax reform proposal 69 percent to 31 percent, value Michigan’s businesses, and understand the importance of making the state a smart place to invest. As Howard Edelson, the campaign manager for the Michigan Citizens for Strong and Safe Communities committee stated, “[Michigan voters] understood that reforming the Personal Property Tax was a win-win for their communities and Michigan businesses.”
If you own and run a business, know what the Michigan personal property tax change means for you. Thanks to the changes, you may be able to grow your business in a way you were unable to before.