LANSING ? Michigan Gov. Jennifer Granholm signed into law Thursday a replacement for the controversial Single Business Tax that its supporters said would jump start the languishing Michigan economy.

“All right, it’s soup,” a beaming Granholm said as she inked the Michigan Business Tax (SB 94 , PA 36) into law during a signing ceremony. Flanked by 10 House Democrats, one House Republican, one Senate Democrat and Lt. Gov. John Cherry, Granholm said companies could now move forward with certainty in Michigan and the new tax allowed everyone the opportunity to promote the state as “open for business.”

Granholm said MBT, which begins collections on Jan. 1, 2008, helps small businesses and manufacturers, allows the state to diversify its economy and provides the investment in areas like public education by keeping a revenue neutral tax in place.

Small businesses are only responsible for paying the tax if their sales are above $350,000 and after that their liability is phased in. There are also exemptions for start-up businesses and new business activity where 20 jobs or more are added. Overall, small businesses should see a $125 million to $150 million cut in their tax liability and 73 percent of all businesses will see a reduction in their taxes.

Existing Michigan Economic Growth Authority, brownfield, historic preservation and renaissance zone credits are also maintained in the MBT.

The tax includes a rebate trigger in the 2008 fiscal year if revenue is 5 percent above the expected amount of revenue, which is roughly $1.9 billion. For two years after that, revenues above the growth in Michigan personal income plus 1 percent will trigger rebates. The rebates will be distributed by giving half back to the taxpayer and half to the state’s budget stabilization fund.

The MBT is a business income tax at a rate of 4.95 percent coupled with a net worth tax of 0.8 percent. Banks will pay an alternate net worth tax rate of 0.235 percent and insurance companies will pay a premiums tax rate of 1.25 percent. The tax also incorporates a variety of credits toward a firm’s liability for increased payroll and capital and research investment.

Granholm did not take any questions from reporters after telling those in the audience – including legislative and fiscal staff, Department of Treasury officials and individuals from various business groups who had been invited – that the new tax helps small businesses and manufacturers, allows the state to diversify its economy and provides the investment in areas like public education by keeping a revenue neutral tax in place.

After calling the SBT a job-killing tax, the governor thanked Treasurer Bob Kleine for “giving birth to the next tax.” Kleine of course was one of the authors to the original SBT and the introduction drew laughter from those in attendance.

Granholm then read through a laundry list of those in attendance, and those who were not, who she said played a critical part in shaping the new tax structure.

Absent from the signing was the actual bill sponsor, Sen. Nancy Cassis (R-Novi), as well as House Speaker Andy Dillon (D-Redford Twp.) and Senate Majority Leader Mike Bishop (R-Rochester) whom Ms. Granholm applauded for pulling together a bipartisan work group. Several people were stuck in traffic or had scheduling conflicts and couldn’t make the signing, the governor said. Several members were also were attending the NAACP event in Detroit where a number of presidential hopefuls were speaking.

In a release, Dillon, who was back in his district for the day, said, “The MBT will help jumpstart Michigan’s economy by rolling out the welcome mat to 21st Century job providers and creating jobs for workers.”

A workgroup, not necessarily made up of the same membership as the original one, will move forward on trailer issues to the MBT, Rep. Steve Bieda (D-Warren) said afterward. The House Tax Policy chair said he hopes to meet with more of his chamber and Senate colleagues next week to see what issues will be taken up before the Single Business Tax expires December 31.

Cherry said a year ago there were those who had said the task of replacing the SBT would be easy, but he assured them the experience was much different. Mr. Bieda joked that “in some cases I wouldn’t want to see the same people for hours and hours,” but because they did forge through, it showed everyone’s commitment to Michigan.

“The legislative process is not always pretty. But I think at the end of the day we carved out a good product,” he said.

And Rep. Brian Calley (R-Portland), the lone Republican legislator present, said he was happy to work on answering one of the biggest unanswered questions in regards to next year’s budget and hoped “this is just the beginning” of Democrats and Republicans working together – a sentiment that was echoed by Sen. Deb Cherry (D-Burton), the lone Senate lawmaker present.

Granholm too said she thought the MBT was a “model” for how all sides will work together to solve the rest of the state’s problems.

There was sort of an organized chaos after the governor signed the official document and then legislators, staff and business types took their turn watching Granholm sign one-page copies as souvenirs and had their picture taken.

Several of the gentlemen present were asked to straighten their ties and the governor herself was asked whether she could “lose” the reading glasses she had on, which she obliged.

Afterward, Granholm retreated into her office for a private bill signing of the personal property tax relief (HB 4369 , PA 37; HB 4370 , PA 38; HB 4371 , PA 39 and HB 4372 , PA 40). Manufacturers will see a 65 percent reduction in their personal property tax liability, while commercial and telephone property owners will see a 23 percent decrease on average.

Also signed was HB 4493 , PA 41, which creates a multi-department supplemental budget for the current fiscal year.

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