Michigan governor to sign business tax cut bills
CHICAGO (Reuters) – The Michigan Legislature completed
passage early Wednesday of a $600 million tax relief bill
package for large manufacturers that Gov. Jennifer Granholm
said she will sign into law.
The legislation, which was designed in part to aid the
state’s struggling automotive industry, will provide the relief
over four years.
Under the legislation, the state will create a 15 percent
personal property tax credit beginning in 2006 and a new 100
percent new investment credit on property directly related to
jobs transferred to Michigan in 2007 and 2008. Michigan-based
companies that export goods would also get a tax advantage with
a change in the state’s sales tax apportionment factor.
The legislation will also maintain the current tax status
for auto suppliers Delphi Corp., and Visteon Corp., allowing
them to avoid a massive tax hike at the end of this year.
“There is no question we must fight to keep the
manufacturing jobs we have in Michigan,” Granholm said in a
statement, adding that the bills send a signal that
manufacturing has a place in Michigan’s future.
Major Michigan-based manufacturers, including Delphi, which
filed for bankruptcy protection in October, and auto giant
General Motors Corp. have announced job cuts as they attempt to
restructure their operations.
Michigan, meanwhile, has been struggling with eroding tax
revenue and high unemployment rates.
Leaders of the Republican-controlled legislature offered
the tax relief plan late last month after an agreement over a
previous plan with the Democratic governor fell apart.
The governor’s main problem with the previous plan was the
legislature’s willingness to let the state’s single business
tax expire at the end of 2009 without any identified
replacement. The new bill package does not address the future
of the single business tax, which will likely to be taken up by
lawmakers next year.