July 23, 2014 - By Meg Peters
Review Staff Writer
Two Orion Township elected state officials shared their insights on pending legislation voters will see on the August 5 ballot.
Vice President of Jacobsen's Flowers and 46th district State Representative Brad Jacobsen and District 12 Senator Jim Marleau –both who will be on the ballot for re-election August 5— met with local business owners last week.
Held in the Orion Center on July 15, Jacobsen and Marleau led a small business roundtable discussing one item that could help relinquish business owners from a very old tax—voting yes on Proposal 1, or repealing the Michigan personal property tax (PPT) placed on business equipment.
Also present were Representative Mike McCready, R-Bloomfield Hills, and representatives from both the Small Business Association of Michigan (SBAM) and the Orion Area Chamber of Commerce.
The roundtable was open to any Orion or Oxford Township business owner interested in learning the implications of the initiative termed as State Proposal 14-1 on the ballot to be determined by voters August 5.
Proposal 14-1 asks voters to consider whether or not to slowly dismantle the Michigan PPT for small business owners.
The exact language from the August 5 ballot asks voters to decide whether to:
"Reduce the state use tax and replace with a local community stabilization share of the tax for the purpose of modernizing the tax system to help small businesses grow and create jobs in Michigan.2. Require Local Community Stabilization Authority to provide revenue to local governments dedicated for local purposes, including police safety, fire protection, and ambulance emergency services. 3. Increase portion of state use tax dedicated for aid to local school districts. 4. Prohibit Authority from increasing taxes. 5. Prohibit total use tax rate from exceeding existing constitutional 6% limitation. Should this law be approved?"
Both Jacobsen and Marleau are in favor of repealing the PPT which would continue Michigan's revival of the small business economy by phasing out companies worth $80,000 or less from the legal requirements of what many people term a double tax.
For decades Michigan's small businesses have paid the six percent sales tax when purchasing their equipment, and an annual personal property tax for "the privilege to use the equipment locally," Jacobsen said.
"We bought a refrigerator for our store (Jacobsen's Flowers) in 1964 and we still pay taxes on it," he said. "If your computers, refrigerators, cash registers, etc. are worth $80,000 or more, you would still have to pay the tax but at a reduced rate. If they are worth less, businesses wouldn't pay anything."
The proposal would replace the current system of special tax breaks by establishing a statewide Essential Services Assessment paid by companies greater than $80,000 in personal taxable materials and be redistributing the state Use Tax.
"The state is now going to take part of the money from the Use Tax to reimburse the communities for what they're receiving from the personal property tax because we don't want the communities to lose money for their local police, fire and schools," he explained.
The proposal will not affect property taxes paid on personal properties, such as a residence, or other individual taxes, and only affects small businesses.
Because the Michigan PPT currently funds a portion of local municipalities' revenues, Jacobsen said it had to be determined by voters.
Jacobsen said the state would phase the PPT tax out over the next several years to cover larger corporations.
"If approved, anyone who has a smaller business is going to see relatively quick money back into their pocket," Jacobsen said. "We are hoping we can encourage other businesses to move to Michigan and/or existing businesses to be able to expand. We are one of the few states that have that."
The Orion Area Chamber of Commerce took an official position at the meeting and supports voters passing the proposal.
"We are trying to educate the general public because they need to vote in favor of this," Chamber Director Alaina Campbell said. "If you don't own a business, you might not know what this is or why it is important to eliminate it.
The more taxes a business pays the less people they can employ and the less money they can invest in creating new products and services. We all pay for it in the end," she said.