SBT Replacement Plans

The Chamber supports replacing the Single Business Tax (SBT) with a revenue source that meets the following criteria:

• Simple for a business to understand and compute, and for the State to administer
• Fairly applied to all businesses and business sectors

The Chamber has a committee of members that is actively working on this issue. Here is a summary of the new tax proposals that have been floated to date:

Michigan Business Tax: The MBT has three main components: gross receipts, assets which would be taxed at .125 percent and business income which will be taxed at 1.875 percent. The MBT was proposed by Governor Granholm in late 2006. For more information, download MBT overview.

Annual Business License Fee:  Businesses would pay an annual fee to do business in Michigan, based on Michigan sales.  A company would figure their Michigan sales and use a fee schedule to determine what they owe. This plan has been proposed by the Detroit Regional Chamber of Commerce.

Fair Tax:  This plan would eliminate the single business tax, the personal property tax, and the state income tax. In its place, the state would raise the sales tax from 6% to 8.5% or higher. The tax would only be applied once at the point of final consumption, and money would be given back to lower income residents to overcome the regressive nature of the tax. The Fair Tax has been proposed by State Representative Fulton Sheen (R-Plainwell).

Business Activities Tax: A business activities tax based on Michigan sales which would start at $350,000.  Businesses with at least 1 employee that have sales of less than $350,000 would pay a flat fee of $150.  The tax would be set up so both the SBT and the personal property tax would go away. The Grand Rapids Area Chamber of Commerce proposed this plan.

Income Tax/License Fee Combination:  Bring back a corporate income tax, but keep the rate low and also have a business license fee.  Use this combo in place of the SBT and possibly a portion of the personal property tax. The Michigan Chamber of Commerce proposed this plan.

Business and Economic Stimulus (BEST): Plan proposed by Senate Majority Leader Michael D. Bishop (R-Rochester). This proposal is supported by the Small Business Association of Michigan (SBAM). BEST plans on stimulation economic growth, expand jobs and increase business investments by cutting the taxes of Michigan's job providers by $290 million.