Q: What is the Michigan personal property tax reform proposal and why should I care?
A: Proposal 1, the statewide referendum on the Aug. 5, 2014 ballot, is a measure to reform Michigan’s outdated tax on business equipment while changing the way local governments are funded. Proposal 1 solves two problems at once – without a tax increase on anyone. It keeps in place the state Legislature’s bipartisan work to end the tax on manufacturing and small business equipment, plus it stabilizes local communities by providing a reliable funding system to provide 100 percent reimbursement to pay for services such as education, fire and police protection.
Proposal 1 is critical to Ford’s long-term competitiveness, and it’s good for Ford jobs and investment in the state.
Q: Why are Michigan voters being asked to vote on this?
A: The Michigan Legislature passed legislation that reforms business personal property taxes and local government funding mechanisms. The legislation included a referendum ballot requirement because the state constitution requires voters to approve changes in local taxes.
Q: What is the personal property tax on business equipment?
A: Currently in Michigan, businesses pay personal property taxes on the value of their equipment every year just for owning the equipment. In Ford’s case, these are locally collected taxes on equipment like stamping presses, robots and paint booths. The revenue generated by these taxes is used to fund local community budgets.
This tax on business equipment in Michigan puts the state at an economic disadvantage when competing for new business and jobs. Personal property taxes on manufacturing equipment have been eliminated in nearly all neighboring states and provinces. Proposal 1 would immediately eliminate the personal property tax on small businesses and phase it out for manufacturing equipment, while making sure local governments have the funding they need to provide vital services.
Q: Does Ford support Proposal 1?
A: Yes. The tax reform is critical to Ford’s competitiveness – and if made permanent – will significantly reduce the company’s tax burden. Eighty percent of the company’s property taxes are paid in Michigan, but only 50 percent of Ford’s property is in the state. The tax on manufacturing equipment is the biggest driver of this disparity.
Q: Does Proposal 1 raise taxes?
A: No. This referendum is NOT a tax increase on businesses or individual taxpayers.
Q. How is it funded?
A: Proposal 1 guarantees that 100 percent of the money a community loses from the elimination of personal property taxes will be replaced using a more stable revenue stream supported by use tax, expiring business tax credits and a special assessment on those manufacturers receiving a personal property tax reduction. Ford and other manufacturers will continue to pay real estate property taxes and an essential services assessment, as well as business and use taxes in Michigan. Proposal 1 ensures that local community services funding is not subject to the uncertainty and politics of annual state budget battles.
Q: Who else supports Proposal 1?
A: The proposal has broad bipartisan support of lawmakers, communities, local governments, businesses and first responders.
Q: What happens if the ballot proposal doesn’t pass?
A: If Proposal 1 fails, the legislation eliminating the personal property tax on business equipment is automatically repealed and this burdensome tax remains.
Q: I won’t be in town on Aug. 5 – how can I make my vote count?
A: Beginning in early June, registered voters can request an absentee ballot to vote in the August election. You can learn more about Michigan’s absentee voting procedures and request an absentee ballot at the Michigan Secretary of State's Web site
. Voting absentee is a great way to ensure your vote is counted if you can’t make it to the polls on Election Day.
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