January 09, 2013 - There's no shortage of opinions regarding the new state laws repealing the levy of personal property taxes on items such as equipment, tools, furniture and computers used for commercial and industrial purposes.
"With any tax structure there has to be a balance between business and residential taxes," said Oxford Township Treasurer Joe Ferrari, who's opposed to the new laws. "Unfortunately, the pendulum is swinging far in the favor of business."
Ferrari fears the state's plan to replace 80 percent of the lost personal property tax revenue will eventually go away and local governmental units will be forced to shift more of the tax burden onto residents.
"I personally support (personal property tax) reform and I completely understand how this could help the Michigan business community to grow and to prosper," said Oxford Public Library Director Bryan Cloutier. "However, I am disappointed with how our state Legislature handled it and I am equally disappointed that there is no real guarantee that the proposed 80 percent reimbursement to local government is sustainable."
Based on the new laws, the library should receive 80 percent of the $55,662 it currently earns from commercial and industrial personal property taxes. That means it stands to lose around $11,000 in local tax revenue, according to Cloutier's calculations.
"I try to remain optimistic, but I will continue to have some reservations until I see a clear formula that can both guarantee and sustain funding," Cloutier said.
Cloutier was critical of the state Legislature's mad rush to approve these bills during the final hours of a lame-duck session.
"Because of the complexity and complications associated with the laws, I still believe more time and care should have been placed on working through the details rather than fast-tracking (a) political agenda through the legislative process in such a short period of time," he said.
But not everyone is displeased.
"I think it's fantastic," said Bobby T. Cox, president and co-owner of Acorn Stamping, a manufacturing company located at 600 S. Glaspie St. in the village's industrial district. "There's really no reason for them to tax us on these things year after year after year. We've got so many taxes that we're paying already."
"I think it's excellent," said Mark Young, owner of Mark A. Young Jewelers in downtown Oxford. "It unleashes us from the overreaching grip of government."
There are those who believe eliminating personal property taxes will give businesses more money to spend as they see fit, which can in turn, help spur economic growth and the ability to help others.
"(Businesses will) have some extra money to invest and maybe even give a pay raise to their employees," Cox said. "There's plenty of places that those dollars can go besides fattening up government's coffers."
"I will be able to now spend that money, if I so choose to, on improving my business or perhaps, paying myself," Young said. "If I deem it necessary or feel it's the right thing to do, I could give it to charity. It gives me as a business owner a little bit more autonomy."
With regard to his own manufacturing operation, which employs 21 full-time and two part-time workers, Cox indicated having additional capital would be a big help when it comes to dealing with economic difficulties created by forces beyond his control.
"We have continued to be squeezed over the last three years by rising costs and the inability to increase our sales prices," he said. "We're getting squeezed from both the raw material supplier and our customer side."
The money that Cox normally would have paid in personal property taxes could now be used to "increase (Acorn's) profit margins and help the long-term viability and stability of the business."
Ferrari doesn't see things the same way.
"There is rhetoric stating that the personal property tax elimination will spur business investment and create jobs," he said. "Where is the empirical proof and evidence? It sounds nice . . . I would like to see a study of a big metropolitan area, like Troy or Sterling Heights, that shows each and every tax incentive and determines, factually, what transpired over the lifetime of the tax incentive. Not what was promised and meant to happen."
Ferrari indicated it would be "interesting to see" how many companies who will benefit from eliminating the personal property tax "have sent their work overseas."
"There should have been a clause in the legislation that rewarded those businesses who invest in American jobs and American workers and are willing to factually prove it," he said. "Those that use overseas workers and factories should not be given the same personal property tax break as those businesses that hire American workers."
"My fear is that this personal property tax break, on the whole, won't provide enough tangible new American investment to offset the loss in tax revenue," Ferrari added.
Cox, who's owned Acorn Stamping since 1997 and moved it from Rochester to Oxford in 2001, holds the opposite view.
"Just the fact the state is doing this, (gives) Michigan a more business-friendly climate," he said. "Anything we can do to increase the number of businesses coming into this state will be just awesome for all businesses. It's going to put more people to work in the state."
A recent Anderson Economic Group report estimated that eliminating Michigan's industrial personal property tax, in combination with the corporate income tax reforms passed earlier this year, will create between 20,000 and 45,000 jobs.
"There's an old saying, 'A rising tide raises all boats,'" Cox said. "When there's additional business in the state, then I expect I will see additional business for my company as well."
More businesses and more jobs in Michigan will ultimately lead to more tax revenue for governments, according to Cox.
"Growth is important," he said. "If we don't grow, we're not going to get the tax revenue to do the things that we need to do in this state or in the nation, for that matter."
Cloutier, who chairs the Oxford Village Planning Commission, isn't sure how the personal property tax elimination will affect economic growth.
"It is perhaps a little premature for me to speculate as to how this could impact local commercial and industrial growth here in Oxford—at least from the village's perspective," he said. "In order for Oxford to attract and retain business growth, I believe we need a better infrastructure, better policies, procedures, and ordinances.
"My colleagues and I who serve on the planning commission are working to improve Oxford's business retention and attraction record, but only time will tell how the changes to the state's tax code will have an impact locally."
CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.