3520469

Substantial Hike in Small Biz Tax Payments

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If you own a small business in Michigan and it feels like you’re paying more on your tax bill these days, you’re probably right. A report out from Anderson Economic Group commissioned by several key business organizations in the state shows that small businesses paid $702-million in income taxes on their profits in the most recent full study year of 2014 than they did just three years earlier when the tax bill came to $464-million. That’s a 51-percent increase in just three years time.

Commissioned by the Michigan Chamber of Commerce, Business Leaders for Michigan, the National Federation of Independent Businesses, the Michigan Retailers Association, the Small Business Association of Michigan and Michigan Realtors, the report discusses the taxes paid by Michigan businesses in FY 2014, the most recent year for which comprehensive cross-state data are available.

The report, A Spotlight on State and Local Business Taxes in Michigan, finds that tax payments to state and local governments in Michigan totaled over $14-billion, including sales, property, and income taxes. Property taxes accounted for more than $6-billion of those payments. The report also includes a breakdown of how major taxes are distributed to public entities, such as state government funds, local schools, municipal governments, and libraries.

Here are some Key Findings from the report:

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  • Businesses paid over $14 billion in state and local taxes in Michigan in FY 2014.
  • The state’s General and School Aid Funds each receive over $2 billion from taxes paid by businesses.
  • School districts and other local governments combined received over $6 billion from taxes paid by businesses.
  • Payments under some taxes went up, while others went down, due to policy changes, the economy, and the after-effects of the recession. Overall, total business tax payments declined by 7% from FY 2011 to FY 2014.
  • Michigan’s business tax burden ranking has improved from 32nd to 20th over the past four years, the second-fastest improvement in the rankings.

Alex Rosaen is Public Policy Director at the Anderson Economic Group. He says, “It is important to remember while looking at overall averages that different businesses vary widely in what will affect them the most.” He adds, “For example, a small professional services firm would find the individual income tax on pass-through income to be more important than sales or motor fuel taxes.”

The report utilizes analysis from AEG’s 2016 Business Tax Burden Rankings, which ranks 50 states and the District of Columbia in terms of their relative tax burden. There are 11 different types of state and local taxes tracked by AEG in the study, which has been published for 10 years.

Patrick Anderson, AEG Principal and co-author of the report tells us, “Michigan businesses are contributing over $14 billion in state and local taxes.”  He notes, “I am particularly pleased our ranking has improved to where we are ranked 20th in the country in terms of the business tax burden.”

Charlie Owens, State Director for the National Federation of Independent Business says, “What is so important about this report is that it examines the total taxes paid by Michigan business both large and small–rather than just focusing on a specific business tax alone.”  He notes, “Those that are looking for justification to increase taxes on job providers always point to the tax that is collecting less and ignore other taxes where revenues are up–such as the taxes small business pays through the personal income tax.”

You can see the full report by clicking the link below:

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