Proposal 1 aims to update tax code and lift tax burden on businesses

On August 5 with Proposal 1 voters will have a chance to modify in small part the current state tax code and replace income generated by the Personal Property Tax with monies collected from industrial property owners under an Essential Services Assessment (ESA) as well as the statewide use tax known as the Local Community Stabilization Share. These monies will be disbursed by a newly created Local Community Stabilization Authority. Taxpayers will not be required to pay any new taxes under this new proposal.

As the tax code is written now, businesses must pay taxes annually on equipment they purchased, no matter if the equipment is a decade, or four, old, and regardless of what sales tax they paid on it at the time of purchase. Business owners feel that this is an unfair, punitive tax, and some economists have asserted that it is this kind of disincentive that drives businesses from Michigan to states with less of a tax and regulatory burden.

The difficulty with simply eliminating this tax is that so many Michigan municipalities rely on that income in order to be able to provide critical services. If the tax is eliminated and not replaced with anything, citizens will suffer a significant loss of services such as city police, fire, libraries, schools, roads and jails throughout Michigan. Proposal 1 was crafted with the input of both businesses and city governments and is widely supported by both.

Unfortunately for a measure that is intended to eliminate the double tax burden on small businesses and stabilize funding for city services, the language of the bill itself is dense and, for many, indecipherable. In response, Michigan Citizens for Strong and Safe Communities has launched a $5.6 million marketing campaign to educate the public and eliminate confusion about this ballot issue. The funding for the campaign was donated in large part by businesses, including Ford Motor Company and Dow Chemical. The Michigan Manufacturing Association also contributed $1.6 million.

In Grand Rapids the City Commission is strongly urging voters to support Proposal 1 with a yes vote as is Mayor George Heartwell and the Grand Rapids Area Chamber of Commerce. State House Candidate Cindy Duran, however, feels that the passage of Proposal 1 will have a number of unintended consequences. The Wayne County Taxpayers Association is also urging a no vote for a number of reasons, asserting that the complex ballot language will lead to misinterpretation of the passed proposal in the future and abuse by the newly created Local Community Stabilization Authority.

Gearing up for the August 5th Primary

Kent County residents are beginning to get bombarded with campaign literature related to primary elections, millages and ballot proposals as the August 5 date approaches. For some this means nothing more than more flyers to pitch into the recycling, while for others the tension heightens as they speculate about tax revenues, loss of services or employment, or just undesirable political representation.

Locally, it's obvious that some people are shaken or made nervous by what recent polling has revealed. Election yard signs have been destroyed or stolen, and political polling and pamphleting has been ramped up considerably. Several candidates have announced and held town halls to further dialogue with their potential electorate. Some of this outreach has been largely smear tactics as with an apparently Brian Ellis-financed telephone poll that begins with questions that seem objective and then lists a series of statements and accusations about Justin Amash designed to manipulate the polled citizen rather than measure any upcoming vote. Amash is a polarizing candidate, and his beliefs and stances often clash with the interests of many in his congressional district, but questions framed like, "If we told you Amash owns an expensive house in [X], would that make you more likely to change your vote?" "Much more likely?" seem crafted to exploit and arouse negative emotions, not measure political opinions.

In Kent County, but not in the City of Grand Rapids, voters will be asked to decide on whether to vote yes on a millage to continue funding Kent District Library. If this millage does not pass, the library system will not be able to continue operating into 2015. For many people who depend on library services for education, entertainment, or job searching or who work for the KDL system, this is a nailbiter issue.

Proposal 1 will appear on all ballots because it's a state-wide attempt to eliminate the Personal Property Tax, which is an annual tax levied on business equipment and machinery, and replace it with a Local Community Stabilization Share Tax. Many business owners object to paying annual taxes on aging equipment, but some municipalities rely heavily on income from the PPT and would have to significantly limit services if it were simply eliminated. Proposal 1 aims to stem the flow of Michigan owners selling their businesses or moving them to states with lesser tax burdens.

For local citizens unaware of what will be on the ballot August 5 or unsure of what the proposals or millages may mean for them, Mlive just put out a voter guide designed to help. The guide pulls up election choices by address and is a good place to begin assembling information on candidates and issues. The length of the guide varies by location, and it would be a good idea to look at it earlier, rather than later, in order to make more informed voting choices.

See you at the polls on August 5th!