MI Personal Property Tax
Quick Analysis of legislation approved last
week to eliminate Michigan Personal Property Tax
The personal property tax (PPT) will be eliminated in 2016 for all Michigan businesses, pending voter approval of a tax provision that would enable a state tax to be used for municipalities. The election for this proposed provision would likely occur in August 2014.
Regardless, the personal property tax exemption will go into effect for small business parcels with less than $40,000 of taxable equipment on January 1, 2014.
The PPT is a tax on assessed on equipment inside most businesses, with the greatest impact on manufacturers. The tax was viewed as a detriment to Michigan’s business climate since most Midwest states don’t assess such a tax. However, the tax is a significant source of funding for a number of communities, including Livonia. The city counted on the PPT for $6.6 million a year (11.4% of its annual budget) and Livonia schools collected some $500,000 a year from the tax.
Voter approval of the proposed tax provision would enable the state to reimburse impacted municipalities 80% of revenue lost from the eliminated PPT. Individual municipalities could take action to increase tax assessments on businesses that benefitted from PPT relief to reimburse 100% of lost PPT revenue used only for police, fire, jail and ambulance services.
The Michigan Manufacturing Association estimates the PPT elimination will make way for the creation of at least 20,000 jobs. The Michigan Chamber of Commerce also supports this legislation. The Michigan Municipal League stands neutral on the compromise deal approved by Michigan House and Senate last Friday, Dec. 14.