State Representative Al Pscholka finds himself in the crosshairs of nearly a dozen statewide business organizations today all for a bill that he first introduced into the State House in August of 2015. That legislation may be gaining momentum in the current lame duck session after a similar measure introduced in the State Senate last last month gained traction. The Michigan Chamber of Commerce contends both would mandate suburban employers to become tax collectors for Michigan cities that impose an income tax on their residents.
The Chamber says both Pscholka's bill (HB 4829) and a Senate bill (SB 1127) introduced by Senator Geoff Hansen of Hart, "would penalize employers who hire residents of cities that impose a local income tax." Pscholka's measure is specific to, and would only impact Detroit, while Hansen's would impact any city that levies a local income tax.
Job providers represented by eleven different agencies and organizations joined together in Lansing Monday to speak out against those pieces of legislation.
The Michigan Chamber's Senior Director of Tax & Regulatory Reform, Tricia Kinley, said,“If cities are unwilling or unable to carry out the responsibilities that come with imposing an income tax on their residents, then maybe they should repeal the tax outright." Then she added, “Or, cities should work to improve their own enforcement mechanisms.”
Pscholka told me at mid-morning today, " I am not actively working the legislation at this time. (He introduced it 16 months ago.) However, I believe Detroiters should pay for Detroit, not all the taxpayers of the state. I have supported billions in tax and regulatory relief for Michigan's job creators, and am open to further discussion."
Jeff Wiggins is State Director of the Associated Builders & Contractors of Michigan. He says, “The legislation should not be viewed as ‘just another withholding’ that employers can easily do.” He adds, “These bills would expose employers to unknown liabilities and never-ending audits.”
Twenty-two Michigan cities currently impose a local city income tax. Under current law, employers located in a city with a tax have an obligation to withhold and remit the tax on behalf of their employees. It is legally sound since the employer has a connection to the city and receives services. However, the groups meeting yesterday said that requiring employers who have no connection to a city to be the tax collector is legally suspect and creates a tremendous amount of complexity for payroll withholding.
Amy Drumm is Vice President of Government Affairs for the Michigan Retailers Association. She argued, “Senate Bill 1127 and House Bill 4829 are government-imposed mandates on job providers in response to cities that complain they are losing revenue because they are ineffective at collections or due to taxpayer fraud.” She added, “Shifting their governmental responsibilities onto employers who otherwise have nothing to do with the city in question is simply unfair.”
Delaney McKinley is Director of Human Resource Policy & Membership Development for the Michigan Manufacturers Association. McKinley alleges, “This legislation would impose an administrative nightmare on any employer who employs workers who live in cities with a city income tax," and then added, “What’s most concerning is that the job provider would be liable for the tax debt as well as penalties and interest and enforcement actions and audits.”
Charles Owens is State Director of the National Federation of Independent Business (NFIB). He told reporters Monday, “Many Michigan employers, particularly small business, do their payroll manually in-house; the complexity of complying with potentially 22 different city tax regimes would just be another regulatory headache that employers don’t deserve.” He added, “There is no way to improve this unfair legislation.”
Bob VanDeventer is President & CEO of the Saginaw County Chamber of Commerce. He contends, “To make matters worse, this mandate could easily backfire.” He adds, “If the state makes it so difficult for employers to hire city residents, they may look elsewhere for employees. There are many city residents who are eagerly looking for work and this legislation throws barriers in front of their opportunities.”
Senate Bill 1127 is now on floor of the Senate and Pscholka's House Bill 4829 is on the floor of the Michigan House. Either bill could be acted on in the remaining days of the 2016 legislative session. The job providers represented in Lansing Monday are collectively calling on the Michigan Legislature to reject these bills and focus instead on productive legislation that does not result in damaging burdens placed on job providers.
Eleven statewide business organizations participated in the news conference: Associated Builders and Contractors; Associated Food and Petroleum Dealers; Auto Dealers of Michigan, LLC; Grand Rapids Area Chamber of Commerce; Michigan Chamber of Commerce, Michigan Grocers Association; National Federal of Independent Business-Michigan; Michigan Manufacturers Association; Michigan Retailers Association; Michigan Restaurant Association; and the Saginaw Chamber of Commerce.
