Michigan Senate approves business tax cuts

The Michigan Senate approved a plan Tuesday to cut business taxes by
$1 billion over six years and tie the potential for even more tax
relief to limits on state spending.

Over Democratic objections, the Republican-controlled Senate sent the
legislation to the state House, where Republicans passed their own tax
package in August.

One bill would reduce the state's main business tax rate from 1.9
percent to 1.84 percent in January, saving companies about $50 million
over nine months. Other bills would create a nonrefundable credit for
property taxes paid on industrial equipment and base a company's taxes
solely on sales rather than the current combination of sales, payroll
and personal property.

Another $1.4 billion in tax cuts would be tied to a measure that would
limit the annual growth in state tax revenues to no more than the
inflation rate plus 1 percentage point. Business would get the
additional cuts if tax revenues exceeded that rate plus another $50
million. Some of the extra money would go into the state's rainy day
fund.

In the last 20 years, revenues have gone above inflation plus 1
percentage point 11 times, though the last increase occurred in the
1999-2000 budget year. Most increases came during the boom years of
the 1990s.

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