Michigan Republicans Poised to Slash Up to 57% from City Revenues

First off…I have no love for the personal property tax on businesses. In some cases, it can be a hardship on very small mom and pop businesses, while it’s merely a niussance to larger businesses.

That said, the state of Michigan’s has a new diabolical scheme to eliminate the tax and it’s the worst kind of dogmatic irresponsibility…as in, it’s the kind that’s going to bring ruin on many of our more industrial centers in Michigan. As in, finished. Done. Deadsville. Bankrupt. As if our cities need another boot to the head. Many of the more industrial cities get at least half of their revenue from personal property tax. Here’s an image from the Michigan Municipal League website of what some cities stand to lose in city revenue if this tax cut goes through:

River Rouge could lose 57% of its revenue. Evart, Michigan could lose 35%. And so on. This would KILL a lot of cities.

Okay, but what’s the personal property tax?

It’s a tax on equipment a businesses owns.

For some things, it makes sense to tax these things since there’s a society cost. For example, some equipment makes loud, horrible noises. Other equipment makes tons of dust. Some creates pollutants that need to be cleaned.

For other things, it’s kind of irritating…for example when it applies to furniture. For example, my wife has display cases in her store, and she pays a tax on each one that’s IN her store. There’s no societal cost, it’s just a tax on a business owning furniture.

Okay. Whatever. That’s what personal property tax is.

Now…if you think about this tax, you can start to see how a town with factories would probably have a lot more revenue from personal property tax than, say, a suburb or a town that is mostly homes and few businesses.

In some well-off residential communities such as the Grosse Pointes, personal property tax accounts for 2 percent or less of property tax revenues. In River Rouge, a Downriver industrial city of 8,000 residents in Wayne County, personal property makes up more than half of property tax revenues, according to data compiled by the Michigan Municipal League.

“I basically would have no other choice but to declare bankruptcy,” if the tax was repealed and not replaced, said River Rouge Mayor Michael Bowdler.
“You’re punishing communities that have been corporation friendly, versus the bedroom communities that don’t have to put up with the noise and the dust and everything else.”

From The Detroit News

This is the sort of tax cut that’s going to hit industrial centers MUCH harder than rich suburbs. That, of course, fits the pattern of our Republican leadership. Spare those with the money, kneecap those without.

And while I have no particular love for the personal property tax, my love for my state is greater than my irritation that a small time mom and pop store has to pay a tax on owning a chair or a computer.

The Michigan Municipal League is fighting back against this new proposed tax cut with its Replace Don’t Erase campaign. If our legislators are hell bent on removing this tax…they NEED TO have the political gonads to stand up to their slash, burn, and salt the earth tax cut zealots funding their campaigns and come up with REPLACEMENT REVENUE for Michigan cities. We can’t cut anymore.

Cross Posted from Muskegon Critic

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  • Mark E. Miller

    We had a panel on this at the recent MTA Legislative Conference. There, of course, the focus was on townships, but some townships are as dependent on PP tax as some cities are.

    The legislators on the panel were all saying that municipalities would need to be held harmless, but none of them could specify just how this would be done to match the varying dependence on this tax among munis.

    I agree that this tax is a pain to administer, and is inefficient. I would just like to see the plan to replace it specified before the plan to repeal it is rolled out.

  • Hugh Madden

    This is just Snyder’s plan to spread fascism across Michigan. Each city that fails has a dictator appointed. To the people in the Grosse Pointes I would say, “They came after River Rouge and I said nothing. They came after Defroit and I said nothing. They came after Dearborn, still I said nothin. Today they came after the Grosse Points and there was no one left to say anything.”

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  • http://voodothosting.com/23/ Lorraine Lee

    It seems this issue is back on the front burner. It’d be gratifying if BFM could post an updated report on the subject. Or maybe they already have, but I wasn’t able to find it using the site search. 10Q.