LANSING – Recent changes to the state’s tax system will reduce the overall tax burden compared to other states, but will still leave the state slightly more heavily reliant on property taxes and will shift the income tax burden toward individuals, the Citizens Research Council said in a report released Monday.

The report, 2009 Tax Revenue Comparison: Michigan And The U.S. Average, said the state ranked 18th in tax burden per $1,000 of personal income in 2009. The changes to the corporate and personal income tax last year will drop the state to 20th on that ranking in 2013, the report said.

For tax burden per capita, though, the state will likely hold steady in 32nd place through 2013, the report said.

But the changes will still leave the state’s overall tax system slightly unbalanced as property taxes had again moved up to contributing about 40 percent of the revenue to state and local government, the position they had before the Proposal A of 1994 changes, the report said.

“The inability of most local governments to levy sales and income taxes will cause Michigan’s property tax burden to remain comparatively high in 2012 and 2013, but the Headlee Amendment and the taxable value cap will ensure that property tax revenues will not recover at the same rate as the economy if economic growth exceeds 5 percent or the rate of inflation,” the report said.

The CRC predicted that the income tax would make up 23.1 percent of all revenue, property tax would account for 40.6 percent and sales tax 31.3 percent. Other taxes would make up the other 5 percent.

What will change, at least within the income tax, is who pays, the report said. “However, within the income tax, corporate income tax revenue will contribute a smaller proportion in 2013 compared to 2009 and individual income tax revenue will contribute a larger proportion in 2013 compared to 2009,” it said.

The elimination of a number of exemptions from the personal income tax will likely push the state up in the rankings on that tax in 2013, to 31st among the states in both tax per $1,000 in personal income and in per capita tax, up from 36th and 35th respectively in 2009.

In contrast, it would have the lowest corporate income tax among the states that levy such a tax in 2013, the report said.

Michigan’s rank on sales tax burden will also change in 2013, but that is largely a function of the way the U.S. Census Bureau imputed the Michigan Business Tax to the sales tax, the report said. The CRC expected Michigan to rank 28th in sales tax per $1,000 in personal income, down from 18th in 2009, and 37th in per capita tax, down from 27th.

The Census Bureau had allocated 70 percent of the MBT revenue as sales tax because of the gross receipts portion of the tax. “Therefore, Michigan’s comparative general sales tax ranking was exaggerated in 2009 compared to previous years in this sample,” the report said.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

a>>