LANSING ? A $3 billion plan that provides tax relief to Michigan businesses and investments in jobs and promising new companies, including those in the life sciences industry, was announced on Friday by Gov. Jennifer Granholm, House Speaker Craig DeRoche (R-Novi) and Senate Majority Leader Ken Sikkema (R-Wyoming). The bill is expected to be on Granholm?s desk this week.

The largest share of the package goes into job development, a total of some $1.4 billion when the securitized tobacco funds, venture capital funds and tax credits for businesses investing in new businesses. This portion alone could help the state attract the next Google or other major high-tech business, Granholm said.

Jobs Proposal Details:

$400 million in securitized tobacco funds;

$600 million committed in tobacco funds with $75 in each of next 8 years;

$300 million for venture capital investment;

100 percent tax deduction for profits from Michigan businesses reinvested in other state-based ventures;

The specific details of the tax proposal are:

Tax Agreement: $97.1 million first year/$1.14 billion over six years (figures below are first year/six-year savings)

Cut single business tax rate to 1.85 percent from 1.9 percent in 2009: $0/$171.8 million;

Increase sales apportionment factor to 95 percent from 90 percent as of Jan. 1 and to 100 percent Jan. 1, 2009: $16.1 million/$208.3 million;

15 percent refundable credit for personal property taxes: $75 million/$675 million;

100 percent personal property tax credit in 2006 and 2007 for jobs/equipment brought to the state from elsewhere: $0/$50 million;

Reduce gross receipts and excess compensation deductions: $0/$73.9 million;

Eliminate over five years of health care costs in taxable base: $0/$55.3 million;

Lower taxes for small businesses paying alternative tax: $2 million/$16.2 million;

Small business credit officer pay increase: $2 million/$16.2 million;

Small business adjusted business income provision: $2 million/$16.2 million;

Where the money comes from: $56.5 million first year/$465.9 million over six years (figures below also are for first year/six-year revenues);

Eliminate sales tax exemption on prisoner purchases: $500,000/$4.4 million;

Eliminate sales tax exemption on driver education cars: $500,000/$3.4 million;

Eliminate sales/use tax on international phone calls: $10.6 million/$87.7 million;

Eliminate sales tax exemption on insurance companies: $2.3 million/$18.7 million;

Reduce small business credit in single business tax: $3.8 million/$31.3 million;

Ban deduction on subsidiary out-of-state gains: $8.3 million/$69 million;

Restriction on SBT credit/loss carryforward: $3.8 million/$31.2 million;

Higher penalties for tax errors: $3.8 million/$31.3 million;

Doubling liquor fees: $13 million/$78 million;

Taxes on commercial rental property: $10 million/$110 million.

A major question remains on whether the current sunset on the SBT in 2009 will be eliminated, with the Granholm administration preparing a proposal that would do just that but without full legislative support.

Sikkema said the Senate would have no problem with the proposal with the changes made to the tax because it would also assure businesses some stability instead of having to worry about a new tax being created.

But DeRoche adamantly opposed eliminating the SBT sunset.

“The elimination of the 2009 sunset for the Single Business Tax was not discussed in yesterday’s meetings on the economic plan announced this afternoon, and I am not in favor of moving the date beyond 2009,” he said in a statement.

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