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Tax Cut Plans Come as Michigan’s Business Tax Climate Ranks Favorably 

Michigan’s business tax climate ranks comparatively well to other states, and election-year tax cuts proposed in Lansing could further improve that standing.

The Washington, D.C.-based Tax Foundation’s annual report ranks Michigan 12th overall among the 50 states for its 2022 business tax climate, an improvement by one position from 2021. That’s a ranking that’s also better than every other state in the Great Lakes region except for Indiana, which ranks ninth overall.

The Tax Foundation’s January report on state business tax climates comes as Gov. Gretchen Whitmer pushes for targeted tax cuts through repealing the so-called “retirement tax” and raising the earned income tax credit.

Business groups are closely watching to see how the political debate over state tax cuts ultimately unfolds as legislators and the administration hash out a budget this spring and summer. They also are offering their views on what they’d like to see happen.

The Grand Rapids Chamber wants the upcoming debate in Lansing to include reducing the corporate income tax and eliminating the personal commercial property tax, said SVP of Advocacy and Strategic Engagement Andy Johnston. The Legislature under Snyder a decade ago repealed the industrial personal property tax as part of a broad reform package that created the present corporate income tax.

Whitmer and lawmakers did agree in late 2021, as part of a supplemental spending bill, to raise the exemption on the personal property tax for small businesses from $80,000 to $180,000.

Completely repealing what he calls a “dumb tax” that imposes an administrative burden on businesses would “go a long way” to improving the state’s long-term competitiveness, Johnston said.

The Chamber also urges a bipartisan budget deal reducing the tax burden in a way that’s sustainable and won’t lead to future budget problems, Johnston said.

“From a business community perspective, and from a taxpayer perspective, it’s definitely time to have this discussion,” Johnston said. “We want to make sure what is done really helps advance Michigan’s competitiveness for the long term, and is also responsible from a long-term budget perspective.”

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