LANSING ? One of the largest changes to the Single Business Tax in its history – which will cut the tax rate sharply as well provide credits to companies for personal property taxes paid – is promoted by the Granholm administration as a way to help spur job growth in Michigan by letting small businesses grow, attracting new research and development companies and encouraging major employers to stay in the state.

“It’s a great day for Michigan and it’s a great day for job growth,” Gov. Jennifer Granholm said at a press conference that outlined the principles of the proposal that could call for shifting more than $1.1 billion in business taxes.

Granholm and Treasure Jay Rising said under the proposal some 72,000 companies would see their state taxes decline while another 22,000 to 23,000 would likely see increases.

The proposal is revenue neutral, she said, keeping revenue from business taxes at about $1.8 billion annually. And while she said she would be willing to back other proposals to attract businesses to Michigan (and said she would make some proposals in several weeks, possibly as part of her State of the State address on February 8), this tax initiative would have to remain revenue neutral because of the state’s continuing fiscal difficulties.

But she also said she wanted the proposal acted on separately from action on the state’s 2005-06 budget.

And Granholm said she wanted “urgent action” on the proposal. “The sooner we can make a clear statement that this is done” the better it will be for the business community.

The state’s economy has changed dramatically since the Single Business Tax – the nation’s only value added tax – was adopted, Granholm said. Since 1975, the rise of technology, globalization and portable jobs has reshaped and taken its toll on many aspects of Michigan’s economy.

“Our economy has evolved, but our business tax structure has not,” she said.

Granholm said her proposal would be the most “significant retooling” of the tax in its history, and because the tax now taxes things that businesses can move, the changes are aimed at “providing incentives for job growth” and for companies to stay in the state and expand.

Even though the tax is now scheduled to end in 2009, Granholm said all businesses reasonably understood there would be some type of business tax to replace the SBT. And Mr. Rising said this proposal would give businesses some assurances of what type of tax would be in place.

One group that would see a higher tax rate – the insurance industry – has already sharply ripped the proposal. The Legislature does not yet have details of the proposal, other than those handed out at the press conference.

Granholm said in her press conference she expected there would be efforts to change the proposal and did not rule out changes, but said after more than a year of work on the proposal, “we think this is the best way to go. It is the fairest way to go.”

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