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February 25, 2021
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Business Review Western MI
Business Review Western MI
Tax Trouble
(2007-05-15)
(wgvu) - It's not that Battle Creek plastics manufacturer Doyle Hayes can't
predict his 2008 tax liability. He doesn't even know how to calculate it.

Nor does any other Michigan business owner, yet each needs to plan for
operations and perhaps growth.

The Single Business Tax expires Dec. 31, accounting for approximately $2
billion in annual state revenue. Though uncertainty means risk to
business owners, lawmakers still can't say whether taxes will be based
on profits, payroll, gross receipts, personal property or some other means.

It's delaying, if not killing, some potential deals. I know it
firsthand. We're struggling with it right now, said Duke Suwyn,
president and CEO of commercial real estate broker Grubb &
Ellis|Paramount Commerce in Grand Rapids.

He's working with one out-of-state industrial client representing
hundreds of jobs that is looking at local property.

The problem is that they cannot get assurance that the replacement tax
will be less than or equal to the impact of the previous SBT, Suwyn
explained.

About every large-property deal faces the same chilling effect, he
noted. Area economic developers, too, report difficulty recruiting new
corporate citizens due to the difficulty in planning operating costs in
Michigan.

Senate Republican and House Democratic versions of SBT replacement taxes
continue to be negotiated this week in Lansing, with a handful of
chamber-of-commerce proposals orbiting on the fringes.

Between the state's business tax and its budget pit, they've got to
solve two difficult problems, I would hope, in the next 30 days, said
Jared Rodriguez, governmental affairs chief for the Grand Rapids Area
Chamber of Commerce.

Other business interests are more adamant.

We are gravely concerned and respectfully request that you save the
patient by producing a solid, logical plan for action no later than May
18, 2007, wrote Berrien County's 700-member Cornerstone Chamber of
Commerce in an open letter to Gov. Jennifer Granholm and legislative
leaders.

Area Republican lawmakers this month solicited business feedback on the
replacement tax options in play, with links from their own Web sites to
tax calculators offered by the Michigan chapter of the National
Federation of Independent Business and the Michigan Chamber of Commerce.

We know there's not going to be action on our plan, or the Michigan
Chamber plan, or any other organization's plan, Rodriguez conceded.
Our whole goal is to get some of our ideas and concepts at the table.

Those include a repeal of the personal property tax and movement away
from tax breaks and toward cash grants for economic development incentives.

Business owners, meanwhile, can only guess how to plan for next year's
tax system. Pyper Products Corp.'s Doyle Hayes said he'll start from his
experience with the SBT.

What you do is, you take the lowest common denominator. You prepare for
what happened to us last year. We didn't do well, we had to pay it. You
plan for it, he said. The amount of profit or loss you had didn't
necessary correlate to the tax you had to pay.

He figures that what comes next can't be much worse. If manufacturers
get the breaks they're hoping for including removal of payroll and
benefits from the equation it could be a lot better.
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