Michigan Single Business Tax Repeal Accelerated to December 31, 2007
SALT Tax Alert, August 10, 2006
On
August 9, 2006 , the Michigan Legislature approved a voters' legislative "initiative" to repeal the Michigan Single Business Tax ("SBT") for tax years beginning after December 31, 2007 . In addition to the repeal, the law requires the Michigan Department of Treasury to prorate the SBT to result in the equivalent of zero tax on business activity occurring after December 31, 2007 (presumably, this provision is applicable to taxpayers with fiscal tax years that begin in 2007 and end in 2008). Previously, the SBT was scheduled to be repealed for tax years beginning after December 31, 2009 .
The voters' legislative initiative, led by Oakland County Executive Brooks Patterson, began shortly after Governor Granholm vetoed a legislative bill in March 2006 that would have similarly repealed the SBT for periods after 2007. A voters' initiative is authorized under the Michigan Constitution and requires an initiative petition to be signed by a number of registered voters equal to at least 8% of the voters that voted in the immediately preceding gubernatorial election. The Michigan Board of State Canvassers certified 291,741 petition signatures on July 28, 2006 (254,206 signatures were required). A voters' initiative approved by the Legislature within 40 session days after certification is not subject to voter general election approval and cannot be vetoed by the Governor.
A replacement tax or expenditure cuts for the $1.8 billion generated annually by the SBT have not yet been determined.
Disclaimer: The information provided in this alert is only a general summary and is being distributed with the understanding that Plante & Moran, PLLC is not rendering legal, tax, accounting, or other professional advice or opinions on specific facts or matters and, accordingly, assumes no liability whatsoever in connection with its use.
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