Proposal 1 helps Michigan jobs climate

A proposal that helps Michigan businesses without hurting local governments and schools is a good deal for everyone, including homeowners.

That’s why voters should support Proposal 1 during the Aug. 5 state primary.

Proposal 1 eliminates Michigan’s personal property tax, an equipment tax paid only by businesses and collected by local governments. It also reconfigures the Michigan Use Tax, a separate state tax, to make up for municipalities’ lost revenue.

Businesses have long complained that the tax, levied in perpetuity against the equipment they use, hurts their ability to expand.

State officials have argued the tax hurts their ability to bring new businesses – and jobs – to Michigan.

Among Great Lakes states, only Indiana levies such a tax, and even that tax lessens as equipment ages. Michigan’s tax dates back to the 1890s and is a throwback to a time when geography trumped all other factors and even big businesses were local, rather than international, in scope.

With all that in mind, Michigan legislators last year authorized a phase-out of the tax.

But they overlooked one important point – what the phase-out would mean for municipalities already struggling to balance their budgets.

In a rare move, legislators agreed to scrap the phase-out unless voters pass Proposal 1. But the onerous tax would remain in place if voters say no. A full exemption given this year to small businesses would also be scrapped.

A better option is to support Proposal 1.

Here’s what it would do:

Split state use-tax revenue into two shares with one share, called a community stabilization share, going to Michigan municipalities to offset losses from the personal property tax elimination.

In real terms, slightly more than $96 million would be generated in replacement local revenue for 2015-2016. That share would jump to $380 million by 2016-2017 and rise for many years after that under the state’s formula.

Individual municipalities’ shares would be determined by a new agency, the Local Community Stabilization Authority.

The use tax is levied against a host of activities from boat and off-road vehicle sales to telephone services. At present, it all goes to the state.

School districts, which already receive use-tax money, would see their share increase, another plus under Proposal 1.

To cover the state’s loss of revenue, large manufacturers would pay a new Essential Services Assessment while select tax breaks granted during the Granholm administration would be allowed to expire without being replaced.

That action alone should find favor with local voters concerned with governmental “picking winners” among favored industries while ignoring others.

Proposal 1 would also keep the use tax at its current 6 percent level, dispelling any notion that it is a tax increase lying in the weeds.

It’s a somewhat complex formula and not everyone is convinced it will work.

State Sen. Gretchen Whitmer, the Senate’s Democratic leader, is perhaps the proposal’s leading critic on just those grounds.

Yet, critics are in the minority.

An overwhelming majority of state legislators from both parties supported putting Proposal 1 on the ballot.

The proposal itself has received support from a number of organizations, including the Michigan Municipal League, Michigan Chamber of Commerce, Fraternal Order of Police, the Michigan Association of School Boards and the Michigan Farm Bureau, among others.

All these groups agree that Proposal 1, while perhaps not a cure-all, is a vital step toward making Michigan more competitive. It’s another step toward changing Michigan from a job loser to a job leader.

But their endorsements aren’t the most important.

Yours is.

It’s an endorsement we strongly urge you to give. We urge you to vote YES on Proposal 1 in this year’s primary.

– Livingston County

Daily Press & Argus (Howell)