January / February 2023 MiMfg Magazine 27
Tax Policy
Create a business climate which enables Michigan companies to compete in the global economy from their Michigan location .
Michigan is a manufacturing state . With a total output of $ 99.60 billion ( 2019 ), manufacturing is the largest sector of the Michigan economy . The industry produces approximately 19 percent of Michigan ’ s gross state product . With an average annual compensation of $ 82,019.87 ( 2019 ) per employee compared to just $ 48,632.03 for all other sectors , manufacturing delivers strong incomes for families .
The manufacturing sector brings additional dollars into the state and helps drive the state economy due to the sheer volume of goods exported to foreign countries ($ 55.35 billion , equal to 95.23 % of total goods exported from the state in 2018 ).
Unlike other sectors of the economy that compete with businesses down the street or across county or state lines , manufacturing competes globally with the lowest-cost operating locations in the world . State government must partner with manufacturers to ensure tax policies remain competitive against the ever-changing policies of locations in other states and around the world . This requires a regular comparison process to ensure tax rates , tax methods , tax adjudication or economic development incentives offered elsewhere are matched or improved upon in Michigan . As technological transformation changes the global automotive industry , Michigan must compete for new private sector investment , train its workers , and provide a competitive business climate to empower the manufacturing sector to continue to lead the state ’ s economic future .
Policy principles to support a competitive manufacturing sector :
• Out-compete other states to attract and retain manufacturing investment
• Ensure tax policy continues to drive a strong manufacturingbased business climate
• Recognize that capital is mobile and tax policy influences investment and employment decisions
• Ensure administrative agencies are efficient and responsive as effective partners in our efforts to compete in the global economy
• Reduce property tax burdens on manufacturers
• Ensure protection of private business information in tax appeals
• Preserve ability to appropriately appeal property tax valuations
• Compete for future investments in electric and other alternative automotive technologies
• Compete with other states on relative total tax burden
• Support the growth of existing Michigan manufacturers ( capital access )
• Support Michigan ’ s tool , die and mold industry
Specific Actions for Policymakers :
• Continue robust funding for the Strategic Outreach and Attraction Reserve Fund ( SOAR )
• Ensure competitive effective tax rates for manufacturers compared nationally and avoid tax increases on manufacturers
• Maintain fair property tax appeals process , using all appropriate valuation methods
• Oppose transaction taxes that pyramid tax burdens , such as service taxes on business services
• Amend the Michigan Tax Tribunal Act to ensure the tribunal has clear authority to protect private and confidential business information
• Eliminate personal property taxes on commercial property
• Eliminate the Essential Services Assessment ( ESA )
• Simplify ESA administrative burdens by reducing to a single tax rate
• Create R & D tax credit for manufacturers allowing for refundability
• Cut the personal income tax rate to 3.9 percent
• Increase the child care tax credit to $ 1,500
• Extend PPT situs exemptions for remote personal property for 2023 and then permanently
• Eliminate PPT on all office equipment such as laptops , computers , monitors and printers , both remote and in offices
• Benchmark the corporate income tax rate to other competitor states with the lowest rate in the nation ( such as Indiana )
• Support Michigan ’ s critical tool & die industry
Get More ! As the only sector that truly competes on a global scale , manufacturers require a competitive business climate to be successful from their Michigan location and MMA ’ s members need state government to be an active partner in our pursuit of excellence . Download the 2023-2024 Agenda to learn about all of MMA ’ s priority issues .