Michigan has been a state in decline for a long time. Thanks to decades of unbroken big-government politics, a state which once claimed to be “The Arsenal of Democracy” now resembles a boneyard of industry. Fortunately, the state is taking steps to change course and pass legislation aimed at stimulating business instead of punishing it. One such change, Proposition 1 will be put to a popular vote on August 5 ballot.
Proposition 1 would eliminate Michigan’s antiquated Personal Property Tax (PPT) and provide much needed tax relief to Michigan’s entrepreneurs and job creators. The PPT levies a tax on each piece of equipment bought by a busniness and continues to charge a fee every year the equipment in operation. This has the effect of dis-incentivizing business expansion as owners think twice about adding an extra tax burden. According to Detroit News, surrounding states have already eliminated their own PPT’s. Michigan should repeal this ungainly tax to make itself more attractive to business investment and expansion.
Repeal of the PPT will go a long way to relieving Michigan’s battered state economy. How Money Walks calculates that from 1992-2011, Michigan has lost about $17.85 billion in Adjusted Gross Income to other states in the nation. Along with all that revenue, 440,000 people have absconded from the Great Lakes State from 1985-2011.
Should Michigan voters pass Prop 1, they would provide a $500,000,000 tax cut to businesses while guaranteeing a steady source of revenue for local municipalities. Since the tax will be phased out until 2023, and certain tax credits eliminated, local governments will have plenty of help adjusting to the new revenue structure. Michigan will once again be a competitive state in one of the nation’s most hurt regions.
With the unprecedented number of taxes passed at the federal level over the last few years, it is heartening to see states taking it upon themselves to act responsibly on behalf of their constituents. Though state budgets are stretched thin throughout the country, there will be no reprieve from the current economic malaise if states don’t implement pro-growth tax measures. Michigan voters should vote YES on Proposition 1 when it comes to a vote on August 5.
Photo Credit: Astrid Westvang