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Just Released: A Spotlight On State and Local Business Taxes in Michigan

EAST LANSING, Mich., May 31, 2016—Today, Anderson Economic Group (AEG) released A Spotlight On State and Local Business Taxes In Michigan, which discusses the taxes paid by Michigan businesses in FY 2014, the most recent year for which comprehensive cross-state data are available.

 

The report 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.

Key Findings:

  • 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 our rankings.

“It is important to remember while looking at overall averages that different businesses vary widely in what will affect them the most,” said Alex Rosaen, Public Policy Director at AEG and co-author of the report. “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.

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

“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,” said Charlie Owens, State Director for the National Federation of Independent Business. “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.”

The report was sponsored by the National Federation of Independent Businesses, Business Leaders for Michigan, Michigan Chamber of Commerce, Small Business Association of Michigan, Michigan Retailers Association, and Michigan Realtors®.