(Part 8 in an 11-week economic plan to get Michigan moving again and get our people back to work)

As we work to diversify our economy, create jobs, and get our economy back on track, there is no doubt that creating a competitive and predictable business tax environment is crucial to our success.  As I’ve been arguing for years, we need to get back to basics in looking at business taxes in this state, ensuring that we’re providing a playing field that keeps rates low, minimizes compliance costs, gives businesses certainty in knowing what their tax liability is, and promotes – rather that discourages – job creation and growth.

This last point is especially important in a state working to lower our highest-in-the-nation unemployment rate of 8.9%.  Too often we continue to give tax breaks to companies that are moving jobs out of Michigan, and often out of the country, meaning that Michigan taxpayers are actually subsidizing the elimination of Michigan jobs.  That’s just crazy, and as State Representative I will end the tax giveaways for companies that outsource Michigan jobs.  What’s more, I will redirect those incentives into companies that are creating good-paying jobs in Michigan, putting our focus – and our tax dollars – back where it should be.

I will also take a hard look at business tax rates to ensure we’re competitive in comparison to other states and will ensure we’re giving the right perception to those businesses looking to stay, grow and locate in Michigan.  This table by the Federation of Tax Administrators shows how Michigan compares with state business taxes around the country.  The good news is that Michigan’s basic business tax rate of 4.95% is the lowest among the Great Lakes states that are often our chief competitors. (Ohio’s rate ranges from 5.1-8.5%; Indiana’s rate is 8.5%; Illinois is at 7.3%; Wisconsin taxes at a rate of 7.9%; Minnesota is at 9.8%; and Pennsylvania’s business tax rate is 9.99%.)  The bad news is that the 21.99% “surcharge” on Michigan’s business tax rate, a legacy of the debacle last year in enacting the new Michigan Business Tax, undermines both the competitiveness of our rates and the certainty businesses have in estimating their actual tax bill.  For this reason, I support eliminating the MBT surcharge in a way that protects key investments in areas like schools, public safety, and economic development.

This principle of predictability in our business tax structure is less obvious than the need to keep our rates competitive, but just as important to our state’s ability to keep and attract job providers.  The only thing worse than having a high tax bill is not knowing what your tax liability will be in the first place.  If you are a business looking to stay in Michigan, or locate here, or grow here, you simply can’t make that decision if you don’t know what your costs are going to be, and when we play games with our business taxes, or when we settle for confusing and complicated business tax structures, we’re scaring off businesses and jobs, regardless of how competitive we are on rates.  We need to do better.

Uncertainty also harms Michigan’s economic outlook in another way.  When the legislature in 2006 eliminated the old Single Business Tax without saying what would replace it, the reaction from ratings analysts was swift.  One day after this decision was made, Michigan’s credit ratings dropped, making it more expensive for the state to attract investment and providing less income in areas, like the 21st Century Jobs Fund, where we had issued bonds to jumpstart our economy.  Removing the certainty of our business tax setup made borrowing money more expensive, which meant we had less money coming in to attract the growth industries of the future, had less money to diversify our state’s economy and get Michigan back on track, and had less money to attract new jobs.  So we lost both in existing businesses, who had to make decisions without having any idea how much they would be expected to pay in taxes, and lost in our ability to attract new jobs to our state.  That’s the damage caused by uncertainty and a lack of predictability, and why I will work as State Representative to ensure that businesses have the certainty they need to invest and grow in Michigan.

Finally, while I firmly believe that it is essential to have a competitive and predictable business tax environment, it is also true that we can’t stop there.  There are some, like my opponent, who argue that lower rates are all we need to compete, ignoring the fact that our tax environment is just one of the many areas in which competition for jobs and business investment takes place.  The truth is we also need to ensure we’re doing all we can to build on our strengths, and promote business investment in growth areas like renewable energy and others where we’re well placed to compete and are already creating jobs; we also need to invest in education, including community colleges and universities, to ensure we’re creating the highly-educated, highly-skilled workforce that it takes to compete in a globalized information economy; and we need to strengthen Michigan’s infrastructure in everything from our roads to the broadband connections we need to compete in a new century.  As State Representative, I will be a consistent voice to make our business tax environment more competitive and more predictable, and I will also work to strengthen our hand in all the other ways in which we compete in today’s economy.  That’s the way to create jobs and get Michigan moving again.