Cutting business tax could further harm cities
There is a tax bill winding its way through the Michigan legislature that could financially devastate cities and school districts.
State lawmakers, or more specifically, Republican lawmakers, are supporting a bill that would end the tax on industrial and business equipment – commonly referred to as a personal property tax.
In Hamtramck, we collect about $800,000 a year from the tax, said Financial Director Nevrus Nazarko.
Hamtramck is already reeling from cuts in state revenue, and is on the brink of going bankrupt. A loss of $800,000 in revenue would be the proverbial last nail in the coffin.
The proposed legislation won’t be finalized until after the November election, which is convenient for Republicans who want to dodge facing the consequences of their actions before asking voters for another term.
There is more to the proposal. It calls for replacing this loss in revenue with money the state will receive when past industrial tax breaks expire.
You know what usually happens when a company’s tax break agreement expires? They come right back and ask for another one, or else threaten to move their business elsewhere.
And communities usually cave when facing a threat like that.
Besides that, we don’t trust state officials, and neither does the Michigan Municipal League, which has said the state has failed to live up to past promises before.
Having said all that, it is generally agreed that keeping track of the equipment owned by each and every business and figuring out its taxable value is a nightmare job for communities.
And it can be said the tax likely turns off potential companies from locating – or expanding — here in the state.
But unless someone comes up with a replacement for this tax revenue stream, we can’t afford this tax cut.
Communities large and small would face payless paydays.
It’s easy to say we should cut taxes, but not so easy to explain how communities will be able to provide services.