Michigan SBT Replacement Tax
Community Bank Advisor, 2007 Winter 

In August of 2006, the Michigan Legislature voted to move up the scheduled repeal date for the Single Business Tax (SBT) from December 31, 2009 to December 31, 2007. The governor was unable to veto the initiative petition because it was approved by the Legislature.

Governor Granholm introduced a proposal to replace the SBT in late fall, but no action was taken by the Legislature before the holiday recess. It is expected to be reintroduced in the current session. Her proposal, referred to as the “Factor Tax,” includes a tax computed on assets (for banks the asset portion only includes tangible assets), gross receipts, and taxable income multiplied by 10. The tax rate applied on the total base is 0.125% or 1/8 of 1%. Her plan also provides substantial personal property tax relief to industrial and commercial taxpayers. However, banks will not benefit from the personal property tax provisions as they are already exempt from Michigan personal property tax.

Tax replacement proposals are also being recommended by the Michigan Chamber of Commerce, the Grand Rapids Chamber of Commerce, and others.