LANSING – As many as 35,000 small businesses in Michigan could see their Single Business Tax alternative tax cut under legislation that passed the Michigan Senate Thursday. For that to happen, however, Gov. Jennifer Granholm would have to sign SB 597, but the administration has signaled it opposes the tax cut.

By passing the bill on a 22-15 vote, the Senate expanded the credit to include another 3,000 businesses. Sen. Shirley Johnson (R-Troy) and Sen. Buzz Thomas (D-Detroit) switched caucuses, with Johnson voting against the proposal and Thomas voting for it.

The proposal could cost state coffers anywhere from $24 million a year (according to Senate Majority Leader Ken Sikkema (R-Wyoming)) to $28 million a year (according to Sen. Liz Brater (D-Ann Arbor)).

At the higher level, the break would average $800 per business and at the lower, just under $700. Senate Minority Leader Bob Emerson (D-Flint) questioned how a company could use that small an amount to hire new personnel.

But Sikkema told reporters after the Senate session, “It’s their money. Whatever the amount is, I’d rather have that money put into building a business and hiring people.”

Since Granholm said she was willing to cut the SBT for large manufacturers in December – a proposal that Sikkema said at best would retain jobs – it made no sense to oppose a cut for small businesses, Sikkema said on the Senate floor. Small businesses would be the lifeblood of the state’s economic revival and that hopefully some would become large businesses, he said.

The level of the tax cut could theoretically be covered by additional revenues, or by making policy changes in the state budget, Republicans said. But a spokesperson for Granholm said that without an ongoing source to pay for the cut she will oppose it.

With Senate action on the tax cut, the so-called job providers bill of rights and a bill to commit funds to the Budget Stabilization Fund (see related story) and with action coming next week on a bill to ban the state creating a rule on ergonomic requirements, Sikkema said the Legislature was moving quickly on the agenda that he and House Speaker Craig DeRoche (R-Novi) set last week.

As SB 597 came from committee it would have affected businesses with annual sales of less than $10 million, whose chief executive had compensation of $115,000 or less.

On the floor it was amended to up the CEO compensation level to $125,000. Sen. Nancy Cassis (R-Novi) said the provision would expand the tax break to thousands of businesses that otherwise would pay the regular SBT, but some Democrats criticized the cut when Republicans were unwilling to expand a home heating credit in SB 596.

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