Tax Topics

THE TAX ATTIC with Jerry Coon

April 26, 2012 // 0 Comments

Two complicated tax topics Things are really heating up in Lansing concerning reforming the Personal Property Tax (PPT). Governor Snyder and the legislature are hot on the trail of reforming the entire PPT system. I wrote a few months ago in a column that the complete elimination of the PPT will mean a reduction of revenue to the City of Rockford of approximately $280,000, which equates to over 10% of its budget. In addition, other entities such as Rockford Public Schools and Krause Memorial Library will see potential funding cuts of approximately $400,000. I’m beginning to wonder if Governor Snyder and the legislature have something against municipalities and school systems like Rockford. In all fairness, the package of eight bills introduced into the Senate would create a PPT Reimbursement Fund that would return approximately 81% of the lost revenue, on a non-guaranteed basis, to most local governmental units like Rockford. The good news is that the Michigan Treasury Department will have a fund called the Personal Property Tax Reimbursement Fund. The bad news is the Michigan legislature and the Treasury Department will control the payouts from the fund, hence the non-guaranteed basis. It appears they will be able to put conditions on the payouts to control who gets what and the conditions that must be met before they get the amount. If the legislature determines, however, that money is needed somewhere else, it can go somewhere else. Based on previous experience, this might not work out well for Rockford. The PPT system is being reformed because the assumption is that the businesses that save taxes will then hire employees and our economy will take one more step in the right direction. Great assumption, however, the debatable part of reforming the PPT system is whether those businesses that save taxes will actually hire new employees or just add the savings to their profits. Rockford will have to jump through certain hoops in order to receive their share of the PPT Reimbursement Fund. None of the businesses saving taxes, however, have to jump through any hoops to receive their share of the PPT savings. Let’s get some equality into the system. Let’s have all involved parties meet some pre-set requirements in order to realize the pre-set savings. […]